Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

NEW WRIT

For Leeds, South, in the room of the right honourable Hugh Todd Naylor Gaitskell, C.B.E., deceased.—[Mr. H. Bowden.]

PRIVATE BUSINESS

MINISTRY OF HOUSING AND LOCAL GOVERNMENT PROVISIONAL ORDER (LEEDS) BILL

Read the Third time and passed.

Oral Answers to Questions — SOUTHERN RHODESIA

Independence

Mr. Brockway: asked the First Secretary of State if, in view of the current uncertainty of Southern Rhodesian participation in the forthcoming conference at Victoria Falls to arrange for the dissolution of the Federation, he will now give an assurance to the Southern Rhodesian Government that Her Majesty's Government would recognise the independence of Southern Rhodesia on the adoption of a new constitution based on a wide franchise.

The First Secretary of State (Mr. R. A. Butler): The Southern Rhodesia Government's request for an assurance on independence is the subject of discussions with Her Majesty's Government which have not yet been completed.

Mr. Brockway: Is 'it not increasingly clear that a solution of this problem will be reached only if the Government

are allowed their independence on the condition of a wider franchise, and is it not much better to make this clear now rather than allow the dangerous situation in Southern Rhodesia to develop?

Mr. Butler: We are in process of discussing this and similar problems, and I cannot give a final answer.

Mr. Turton: Will my right hon. Friend bear in mind that had not the British Government in 1953 embarked upon the experiment of federation, Southern Rhodesia would have been independent many years ago? It is, therefore, quite unrealistic in my view for Her Majesty's Government to deny her independence when they are contemplating ending federation.

Mr. Butler: That raises rather a wider Question than the one on the Order Paper. We are discussing the matter of independence with the Southern Rhodesia Government now.

Mr. G. M. Thomson: In these discussions, will the right hon. Gentleman stick to the principle that we do not surrender our responsibility to any minority group in a Colonial Territory and that independence in Southern Rhodesia, as in Northern Rhodesia, must first depend on the achievement of a majority Government?

Mr. Butler: I do not think that the situation can be stated quite as simply as that.

Mr. Winston Field (Discussions)

Mr. Wall: asked the First Secretary of State if he will make a statement about his talks with the Prime Minister of Southern Rhodesia.

Mr. D. Foot: asked the First Secretary of State whether he will make a statement regarding his conversations with Mr. Winston Field.

Mr. R. A. Butler: As I informed the House on 21st May, the current discussions in London are a continuation of the exchanges with the Southern Rhodesia Government on the question of independence which began with the correspondence published in Command Paper 2000. I am not able to make a statement until these exchanges have been completed.

Mr. Wall: Is my right hon. Friend aware that we all realise the very difficult task that is in front of him and that we wish him well? Would he agree that time is not on his side if there is to be secured an orderly dissolution of the Federation? When does my right hon. Friend think that he will be able to make a statement on this matter?

Mr. Butler: I do not think that it will be possible for me to do so in the next two days, because I do not think that the conversations will necessarily be concluded this week.

Later—

Mr, D. Foot: On a point of order, Mr. Speaker. You have not called Question No. 12.

Mr. Speaker: It was answered with Question No. 5. I looked fervently towards the hon. and learned Gentleman, who did not rise to ask a supplementary question

Oral Answers to Questions — NYASALAND AND THE RHODESIAS

Federation (Dissolution)

Mr. Brockway: asked the First Secretary of State if he will appoint independent commissions to arbitrate between the Governments of Nyasaland, Northern Rhodesia, Southern Rhodesia and the Federal Government when disputes occur regarding the allocation of Federal funds and services prior to and during the dissolution of the Federation.

Mr. R. A. Butler: It is Her Majesty's Government's objective to secure an orderly dissolution of the Federation in the interests of all concerned, but I cannot answer Questions about measures to be taken in hypothetical circumstances.

Mr. Brockway: But is it the case that this is so hypothetical? Are there not already difficulties between Nyasaland and the Federal Government regarding the allocation of finances? In order to secure a dissolution of the Federation which will bring the least racial conflict, is it not desirable that the Minister should consider some arbitraral body which may be able to settle these issues?

Mr. Butler: There is already Sir George Curtis who is performing the job of allocating assets and liabilities and

considering the question of the Federal debt and other matters as between Nyasaland and the Federation. This is working quite satisfactorily, but, if necessary, we shall have to enlarge that idea.

Mr. Swingler: asked the First Secretary of State if he will make an immediate survey of the needs for social services in the territories of the Federation of Rhodesia and Nyasaland for which Her Majesty's Government is responsible with a view to ensuring that the supply position does not deteriorate during the period of the break-up of the Federation.

Mr. R. A. Butler: I see no cause for such action at present. As I informed the House in my statement of 21st May, I am communicating with the Governments concerned about a conference to discuss the orderly dissolution of the Federation and the consequential problems involved.

Mr. Swingler: Has the right hon Gentleman seen the disturbing reports in the Guardian recently about diminishing supplies in the social services in Northern Rhodesia, controlled by the Federal Government? Does he know, for example, that it is said that there is a shortage of drugs in the hospitals? Would he cause inquiries to be made to find out whether there is a deterioration in the supply situation so that immediate action can be taken during this difficult interim period?

Mr. Butler: I am aware of these reports, but I understand from my initial inquiries, which are not yet complete, that the Federal Government deny these allegations.

Mr. Goodhew: asked the First Secretary of State what action he is taking to safeguard the right of civilians of the Federation of Rhodesia and Nyasaland when that Federation is dissolved; and whether compensation will be paid to those who lose these rights.

Mr. R. A. Butler: After dissolution, the safeguarding of individual rights will be a matter for each territory. Southern Rhodesia and Nyasaland already have a constitutional Bill of Rights and it is intended that one should be introduced for Northern Rhodesia as soon as possible.

Mr. Goodhew: Is my right hon. Friend aware that there are certain rights attaching to Federal citizens which would not apply if they were living in a city which became Malawi or Zambia? Will he assure the House that the Government have no intention, unilaterally, of introducing legislation which would deprive them of these rights?

Mr. Butler: The question of Federal citizenship in relation to the future of the individual territories is one which will have to be discussed upon the dissolution of the Federation.

Oral Answers to Questions — NYASALAND

Secession Costs

Mr. Wall: asked the First Secretary of State whether he will now state the estimated cost to the British taxpayer of the secession of Nyasaland, both at the time of secession and in each of the five subsequent years.

Mr. R. A. Butler: I would refer the hon. Member to the reply I gave to the hon. Member for Barnsley (Mr. Mason) on 30th April. It is too early to estimate these costs and Her Majesty's Government cannot be committed in advance.

Mr. Wall: Will my right hon. Friend soon be in a position to say what is the capital cost as well as the budgetary annual subvention which will be required to preserve the present standard of living in Nyasaland? Is it not clear that it is considerably more than the figure mentioned here before?

Mr. Butler: There is the question of the development programme, to which the Nyasaland Government attach great importance, and the annual current Budget. We are, of course, attempting to assess, although we are not in a position yet to give the final figures, the two different costs of the deficit in the current Budget and what is necessary to buttress the development fund.

Mr. Mason: Will the right hon. Gentleman not agree that the Federal Government have subsidised Nyasaland to the tune of about £5 million a year in recent years, that this is due to end at the end of June next and that Her Majesty's Government will be faced with the decision of paying this subsidy? Has the right

hon. Gentleman yet made up his mind? Are the Government going to pay it or not?

Mr. Butler: It is not quite as simple as that, because the Nyasaland Finance Minister and his deputy, who have seen me in London, have indicated that what Dr. Banda told me is correct, namely, that they are themselves proposing to impose charges and to institute cuts in order to try to reduce the deficit in the Budget. This will still leave a deficit in the Budget, and it is consequently natural that Her Majesty's Government should be considered as a possible source of future help.

Mr. Mason: Yes, but is not the right hon. Gentleman aware that a serious situation is developing here, that this is a protectorate of Her Majesty's Government and that the Americans are starting to move in with token forces of young pioneers who are taking over teaching, doctoring, and so on? To what extent do Her Majesty's Government view this intrusion?

Mr. Butler: If the hon. Member will give me some particulars of these forces coming in, I shall be glad to give him an answer.

Independence

Dr. D. Johnson: asked the First Secretary of State what guarantees of individual liberty he proposes to obtain in Nyasaland prior to the final grant of independence.

Mr. R. A. Butler: This is already provided for in the Bill of Rights which is included in Nyasaland's new Constitution.

Dr. Johnson: Is my right hon. Friend aware that disturbing attitudes towards individual liberty are developing with the new Government in Nyasaland, as can be supported by evidence which is readily available? Is he likewise aware of Dr. Banda's reported statement at his first Press conference to the effect that the Bill of Rights is "just a piece of paper?" Will he ask Dr. Banda to clarify that statement?

Mr. Butler: Dr. Banda accepted the Bill of Rights in the course of the Constitutional Conference which was held in


London. It is true that he added the words:
…the real Bill of Rights here for Europeans or for anyone who is not an African, is the good will of the people of this country..
He nevertheless accepted the Bill of Rights, and I attach importance to this fact.

Mr. Biggs-Davison: In that statement from which my right hon. Friend quoted, did not Dr. Banda advise people who might have a complaint against trespassers not to go to the police or the proper authorities but to the local political organisation of the Malawi Congress Party? Does this not show that the rule of law is being replaced by one-party dictatorship, and what effect will this have on the people in Northern and Southern Rhodesia, where we all hope to see political advances made for all the communities?

Mr. Butler: When I was in Nyasaland there was some difficulty about encroachment on property, as it is a very closely populated country. I spoke to Dr. Banda about this matter, and I am satisfied that the matter is in hand. I hope, in agreement with my hon. Friend, that it can be dealt with through the normal channels he has mentioned.

Mr. Brockway: Would the First Secretary not agree that since Dr. Banda became Prime Minister he has taken steps to urge racial co-operation between the communities in Nyasaland? Is there any justification for the allegations that he is going back on that in any way?

Mr. Butler: I believe that Dr. Banda fully realises that the 8,000 Europeans—a very small number compared with the 3½ million Africans in the country—should be permitted rightly to live their lives to the full. I believe that to be his view, and it is a view which I would encourage.

SOCIAL SCIENCES (COMMITTEE OF INQUIRY)

Mr. Hornby: asked the First Secretary of State what plans he has for the establishment of a Social Science Research Council; and whether he will make a statement.

Mr. R. A. Butler: The Government have decided to set up an independent Committee of Inquiry to look into the whole question of research in the social sciences. Lord Heyworth has agreed to become Chairman of this Committee and I expect to be able to announce its membership and terms of reference very soon.

Mr. Hornby: As this subject has been under discussion for quite a long time, is my right hon. Friend aware that his decision to appoint this Committee of Inquiry will be very welcome? Will he urge the Committee to come to its conclusions as speedily as possible?

Mr. Butler: Yes, Sir. Certainly.

Mrs. Hart: asked the First Secretary of State what would be the estimated cost of setting up a Social Sciences Research Council; what discussions he has had with university social scientists on the need for such a council; and if he will make a statement.

Mr. R. A. Butler: These are matters on which I shall wish to have the advice of Lord Heyworth's Committee.

Mrs. Hart: Why should it be necessary to have a Committee when we have a Minister for Science who, presumably, is perfectly competent to look into this matter? Why, in addition, should it be three years after this side of the House has asked for consideration to be given to this before even a Committee of Inquiry is set up?

Mr. Butler: I do not think that this is necessarily a matter for the Minister for Science. The social sciences are rather broader than his remit. and this is a matter for which I have been asked to take responsibility. In reply to the last part of the hon. Lady's supplementary question, this matter has been very seriously canvassed. Contact has been made with university social scientists on the need for such a council. We have in the end come to the conclusion that the setting up of this inquiry is the best way to do it.

Mr. Callaghan: is the right hon. Gentleman aware that there will be profound disappointment, after all these years of agitation and research into this matter, at the fact that the Government should now have to take refuge in setting


up yet another Committee of Inquiry? Why cannot the Government, with all the resources at their disposal, make up their own mind on a question like this? Is the right hon. Gentleman not aware of the urgent need for this, that many more graduates are needed in this sphere and that while we have every confidence in Lord Heyworth, if it must go forward on this basis, will the right hon. Gentleman ask Lord Heyworth to give him early recommendations so that they can be implemented?

Mr. Butler: I am aware of the urgency of the matter, and I will certainly convey to Lord Heyworth what appear to be the wishes of the House.

Mr. Swingler: Was the First Secretary serious about what he said about the Minister for Science? Do we understand that he is only the Minister for exact science? Where do the Government draw the line about the responsibilities for science?

Mr. Butler: The Minister for Science had, I think, better answer that for himself. All I know is that, in regard to the social sciences, I have been asked to take the responsibility.

Oral Answers to Questions — NORTHERN RHODESIA

School-Leaving Age

Mr. Dempsey: asked the First Secretary of State what consultations he has had with the Northern Rhodesian authorities regarding the establishment of a minimum school-leaving age for children.

Mr. R. A. Butler: This matter is the responsibility of the Northern Rhodesia Government.

Mr. Dempsey: Would the First Secretary not agree that we have some duty to assist this Government in eliminating the use of young children, often of a very young age, as domestic drudges? In this age of equality, when 240 million Africans are demanding the same equality, would it not redound to the credit of the United Kingdom if we were to sit down, side by side with the other parties, face up to these problems and formulate a plan for establishing a minimum school-leaving age for these young people, even

though that would mean the building of schools and the acquiring of teachers?

Mr. Butler: The difficulty is that I cannot answer on matters which come under the Government of Northern Rhodesia, but I can exercise influence and advice. Education is compulsory in only certain urban and other areas where local authorities consider it practicable. I am, therefore, in somewhat of a difficulty in answering the hon. Member's Question.

Oral Answers to Questions — HOME DEPARTMENT

Joseph Doyle

Mr. Frank Allaun: asked the Secretary of State for the Home Department if, in view of the calling off of Irish Republican Army activities, the amnesty granted his fellow prisoner, Donald Murphy, and the tuberculosis he has suffered in prison, he will now release Joseph Doyle from Wakefield jail, whore he has been imprisoned for the last seven and a half years, and allow him to return to Ireland.

The Secretary of State for the Home Department (Mr. Henry Brooke): I decided last month that, subject to continued good conduct in prison, Doyle should be released on licence in July.

Mr. Allaun: Whilst I am grateful for that reply—which would have been even more welcome had the information been announced before rather than after the Question was tabled—would the Home Secretary now consider, in view of the three special factors mentioned in the Question, releasing Doyle now? Why wait till July?

Mr. Brooke: No, Sir. I cannot go back on my decision in this matter. There have been no signs of active tuberculosis for the last three years, which is one of the points mentioned in the Question, and there is no evidence that imprisonment has been detrimental to Doyle's health.

Mr. Allaun: But as the Home Secretary was good enough to allow Doyle, most unusually, to go to Ireland unaccompanied, and he returned, is it not obvious that the man's character is now such as to enable him to be released now without damage to anyone?

Mr. Brooke: I have taken my decision. I think that it was right to allow Doyle to go to Ireland on parole to attend his mother's funeral, but it would be unfortunate if it were to be accepted that any prisoner who went out on parole and came back should, on that account, be released earlier.

Summer Time

Mr. Shepherd: asked the Secretary of State for the Home Department what are the factors which have brought him to the conclusion that the balance of advantage lies in not harmonising United Kingdom time with that of Europe.

The Joint Under-Secretary of State for the Home Department (Mr. C. M. Woodhouse): To extend the period of Summer Time throughout the winter would inconvenience certain out-of-door industries, in particular farming, which require light for an early start to the day's work, and would mean that for a few weeks more people, including school children, would have to leave home in the dark. So far, these disadvantages have, in our judgment, prevailed against the advantages of an extension to the whole year.

Mr. Shepherd: Does not my hon. Friend think it remarkable that he should consider our farming community when on the Continent there is at least four times the percentage employed on farms? If we are to harmonise our affairs with Europe, is it not time that we took positive steps in even small matters?

Mr. Woodhouse: The Continent is a different place, and what we have to consider are the advantages to and convenience of people in this country. It is a matter of balance. It is a difficult question, and I can only assure my hon. Friend that my right hon. Friend's mind is not closed to a final decision.

Mr. Marsh: Does the Under-Secretary of State seriously suggest that British cattle need different clocks from Continental cattle? Does he really think that he is helping parents by these changes of time? Does he not believe that most parents—although in this country we normally pay more attention to animals —find constant changes in the time very inconvenient? But can he tell us the real differences between British and Continental cattle?

Mr. Woodhouse: I do not make any assertions comparing Continental and British cattle. As to the children, I think that this is a matter of inconvenience that many parents feel, but it is a matter that we are prepared to reconsider, and we do so annually, with a view to deciding whether or not the period of Summer Time should be extended.

Police Establishments

Mr. Shepherd: asked the Secretary of State for the Home Department what scientific means are used to determine and review police establishments; what outside aid has been called in on organisation and methods; and what allowance has been made in the review of establishments for the work now done by traffic wardens.

Mr. Brooke: Establishments are fixed, subject to my approval, by police authorities, but they are kept under close review by H.M. Inspectors of Constabulary. As I announced in the House on 29th April, the new Police Research and Planning Branch at the Home Office will include a unit which will study the criteria upon which establishments should be based. The work done by traffic wardens is taken into consideration when alterations in police establishments are considered.

Mr. Shepherd: Will my right hon. Friend give special attention to this problem since, as he admits in his Answer, exact criteria on which establishments are based are to be set up for the first time?

Mr. Brooke: Yes, Sir. I attach importance to this matter, and I think that my hon. Friend—and, indeed, the House generally—will think that I am doing right in establishing this new police research unit in the Home Office, which will, I think, be able to give us great help on matters of this character.

Mr. J. T. Price: But is not the real difficulty in harmonising police establishments and methods to be found in the fact that police administration is something of a law to itself and is not subject to the control of this House or a Minister of the Crown? Is it not a serious gap in our Civil Service arrangements when a very important Department under Crown administration is divorced from the general practice applying to other


Departments of the Crown? Would it not be better if the Home Secretary and his colleagues set about bringing the police into line with Civil Service practice in every other Department?

Mr. Brooke: I do not accept that the police are axactly parallel with the Civil Service, but I have already said that I am in course of preparing a new Police Bill, which will no doubt provide a convenient occasion for the hon. Member to express his views.

Mr. Callaghan: May I ask whether the Home Secretary is adopting the recommendation of the Royal Commission that the Home Office should depart from its traditional system of not allowing an establishment to be increased until the old establishment is actually full, with the consequential effect of disguising a true shortage?

Mr. Brooke: If the hon. Gentleman would be good enough to put a Question down on that point I should be very glad to give him a considered answer, but, in general, I do not think that we should wait to review an establishment until the force is fully up to strength.

Queen of Greece (Incident)

Mr. Driberg: asked the Secretary of State for the Home Department what enquiries he made before 2nd May into the incident in which the Queen of Greece claimed to have been molested near Claridge's Hotel; and if he satisfied that no physical violence was offered to her.

Mr. Brooke: I would refer the hon. Member to my reply to the hon. Member for Bristol, Central (Mr. Awbery) on 16th May.

Mr. Driberg: Whatever view is taken of this incident, is it not at least desirable that the House of Commons should be correctly informed? Does not the right hon. Gentleman recall that he has repeatedly stated that the Queen "was not touched," while the Prime Minister said that Her Majesty's Government naturally accepted the Queen's account of the incident, in which she claimed to have been seized by the shoulders? Will he kindly clarify the point? These two statements cannot both be true.

Mr. Brooke: The Prime Minister stated that the Government accepted

absolutely the Queen's account of these proceedings. I made reference to an initial report I received from the police. I have no doubt whatever that what the Queen said was the fact, but I would suggest to the House that we might now all endorse what my right hon. Friend the Prime Minister said—that he regarded this incident as closed.

Sir T. Moore: Can my right hon. Friend devise any means by which we can give a special welcome to their Greek Majesties on their State visit, so as to show how deeply we deplore the insults offered to Her Majesty as a guest of this country?

Mr. Brooke: I certainly hope that that will be the case, because I believe that any insults that were offered to her by ill-intentioned people are deplored by the country as a whole.

Mr. Driberg: If the facts of the matter are so unsure, and if the police, according to the Home Secretary, were so unobservant that they did not notice this physical violence being offered to Her Majesty, what guarantee can the right hon. Gentleman offer the Greek Government that she will be properly protected if the State visit occurs?

Mr. Brooke: The hon. Gentleman must recognise that, in regard to any sort of scuffle, the first reports one receives are bound to be confused. This is not something of which one has a film and can examine precisely what happened. But, in my view, the matter has been cleared up, and I hope that the House will regard it as closed.

Care of Children, Kent (School Attendance)

Mr. A. Brown: asked the Secretary of State for the Home Department how many boys and girls, respectively, were committed to the care of the Kent County Council, during the period 1st January, 1960, to 31st December, 1962, as a result of prosecutions alleging nonattendance at school; and how many parents of these children have been denied access to or information concerning their child.

The Joint Under-Secretary of State for the Home Department (Miss Mervyn Pike): I understand that in this period 21 boys and 16 girls were committed


to the care of the Kent County Council as a result of irregular school attendance; the parents of seven of the boys and five of the girls had been prosecuted on this account. One parent of these children was not allowed to visit her child for a time.

Mr. Brown: Is it not quite wrong that children should be placed in the care of a local authority and sent away from their parents on grounds of truancy alone? Will my hon. Friend now consider extending free legal aid to poor parents who are placed in the position of having to defend their children before the courts?

Miss Pike: As my hon. Friend knows, there are several courses open to juvenile courts for enforcing school attendance, but there are circumstances in which committal to care is in the child's best interest. The second part of the supplementary question is another matter, but I will draw my right hon. Friend's attention to it.

Commonwealth Immigrants (Convictions)

Mr. N. Pannell: asked the Secretary of State for the Home Department how many convictions there have been for being in possession of dangerous drugs since 1st July, 1962; how many of those convicted were Commonwealth immigrants; and how many such immigrants could not be recommended for deportation because they had been resident in the United Kingdom for five years or more.

Mr. Brooke: The number of convictions is 522. Of those convicted, 326 originated from other parts of the Commonwealth, and of these I estimate that nearly half had been resident in the United Kingdom for five years or more.

Mr. Pannell: Has my right hon. Friend taken note of the fact that more than half of these offences are attributable to Commonwealth immigrants and that since they are only 2 per cent. of the population this indicates that they are 25 times more prone to this offence than the average inhabitant of this country? Does my right hon. Friend consider that a matter for serious concern?

Mr. Brooke: The House gave consideration to a Bill produced by my hon.

Friend on this subject a little time ago and decided to refuse leave to introduce it. I certainly cannot give my hon. Friend any encouragement to think that the Government would be prepared to introduce amendments in the existing law.

Mr. N. Pannell: asked the Secretary of State for the Home Department how many convictions there have been for living on immoral earnings in the Metropolitan Police District since 1st July, 1962; how many of those convicted were immigrants from the Commonwealth or the Republic of Ireland, respectively; and how many such immigrants were immune from deportation through having been resident in the United Kingdom for five years or more.

Mr. Brooke: In the Metropolitan police district between 1st July, 1962, and 18th May, 1963, 154 persons were convicted of living on immoral earnings. Sixty-eight came from Commonwealth countries and 18 from the Irish Republic. Of these 86, 58 were not liable under the Commonwealth Immigrants Act for deportation because they had been resident in the United Kingdom for at least five years.

Mr. Pannell: In view of the fact that in connection with this offence and the matter of being in possession of dangerous drugs these Answers indicate that more than 50 per cent. of convictions are attributable to Commonwealth immigrants and immigrants from the Republic of Ireland, does my right hon. Friend not think it really regrettable that the majority escape deportation because they have been in this country for more than five years? Would my right hon. Friend take this into account and recognise that if this disability were removed the incidence of these serious crimes in this country would be greatly reduced?

Mr. Brooke: I am prepared to take everything into account, but it seems to me that it would be anomalous if, though we were prepared to offer naturalisation to foreigners after five years' residence in this country. we were to say that Commonwealth citizens who had been resident here for five years could be deported.

Mrs. Hart: Would the right hon. Gentleman explain to his hon. Friends that as long as they continue to insist on


racial discrimination by refusing permission to the Bill which has often been before the House, there will be the lack of integration into society which produces criminal behaviour?

Mr. Speaker: The Minister cannot be asked to give explanations to his hon. Friends.

Mr. Ronald Bell: Would not my right hon. Friend agree that the figures which he gave in answer to the second Question really are dreadful and are bound to cause great disquiet about this serious offence of living on immoral earnings? Cannot my right hon. Friend give careful thought to seeing what can be done about it?

Mr. Brooke: These are grave crimes, but the penalty of deportation is not the only penalty which the courts can consider. It is open to the courts to impose very severe sentences upon them.

Mr. Pannell: Tell them not to do it again!

Approved Schools (Staff)

Mr. Boyden: asked the Secretary of State for the Home Department what is the present shortage of schoolmasters and of housemasters in approved schools.

Miss Pike: In schools under voluntary management there are vacant at present 23 teaching posts out of a total authorised establishment of 350; 30 instructors' posts out of 344; 32 housemasters' posts out of 195; and 6 housemistresses' posts out of 39. Similar figures for schools managed by local authorities are not readily available, but I have no reason to think that the proportion of vacancies to authorised posts is materially different in these schools.

Mr. Boyden: Is not one of the difficulties with instructors and housemasters the inadequate career prospects? Will the hon. Lady look at this and consider whether something could be done to improve the situation?

Miss Pike: I would not agree that one of the difficulties is the inadequate career prospects, because there are adequate recruits coming forward. In

the past we have been short of training facilities, but this has now been remedied.

Probation Officers

Mr. Boyden: asked the Secretary of State for the Home Department what is the present shortage of probation officers; and in what areas the shortage is most serious.

Miss Pike: The number of vacancies now advertised or otherwise known to exist is 67 (52 men and 15 women), but the real shortage is probably greater. Most of the vacancies are in the densely populated areas.

Mr. Boyden: Would the hon. Lady not agree that great damage to recruitment to the probation service has been done by the long drawn out pay negotiations? Could the Home Office give a guarantee that in future when negotiations take place they will be speedier and that automatic arrangements will be made to review pay as it falls behind the rising cost of living?

Miss Pike: I would not accept what the hon. Member says. Recruitment has improved recently and we hope that more and more recruits will be coming forward.

Sir K. Thompson: Apart from salary negotiations, what contacts are maintained between the Department and the Association of Probation Officers to discuss means of improving conditions?

Miss Pike: Contacts are very close.

Fugitive Offenders Act, 1881

Mr. Swingler: asked the Secretary of State for the Home Department what progress has been made in the consultations taking place about amendment of the Fugitive Offenders Act, 1881, in the light of its relationship to the future pattern of the Commonwealth; and if he will bring forward proposals to amend the Fugitive Offenders Act, 1881, so as to ensure that in future Commonwealth citizens will be in no worse position than aliens in respect of the right of political asylum in the United Kingdom.

Mr. Brooke: I am in consultation with my right hon. Friends on the future of this Act. I cannot anticipate the result of


the review of the Act, in which other members of the Commonwealth are closely concerned also.

Mr. Swingler: Can the Home Secretary say that the Government, within a definite period, will bring forward an amendment to the Act whatever the results of the consultations? Was it not a fact that in our discussions over the case of Chief Enahoro practically everybody agreed on the necessity of reforming the Act? Is not the least that the Home Secretary can do to remove some of the discredit arising from the treatment of Chief Enahoro to speed up an amendment of the Act?

Mr. Brooke: While not accepting the implications at the end of that supplementary question, I can certainly say that the Government intend to carry out a review of this Act in conjunction with our partners in the Commonwealth. Quite obviously, I cannot anticipate what the result of that will be.

Sir D. Walker-Smith: Would my right hon. Friend agree that a solution of this problem would be assisted if it were found possible to institute a Commonwealth Court of Appeal to exercise on a wider and more comprehensive basis the jurisdiction traditionally associated with the Judicial Committee of the Privy Council? Will my right hon. Friend make representation to his colleagues to initiate discussions with the Commonwealth in this regard?

Mr. Brooke: I will certainly take note of what my right hon. and learned Friend has said and bring it to the notice of my right hon. Friend the Secretary of State for Commonwealth Relations.

Mr. Fletcher: Will the right hon. Gentleman give an assurance, in view of his unhappy experience in the case of Chief Enahoro, that the Government will take the earliest possible steps to have the Fugitive Offenders Act amended?

Mr. Brooke: I will certainly give an assurance to the House that the Government are pressing forward with their review of this Act, but we cannot amend it unilaterally. We must do it in conjunction with our Commonwealth partners.

Fireworks

Mrs Butler: asked the Secretary of State for the Home Department what new restrictions he is proposing in regard to

the sale of fireworks during the coming autumn.

Mr. Woodhouse: I would refer the hon. Member to the reply which I gave to my hon. Friend the Member for Belfast, West (Mrs. McLaughlin) on 4th April.

Mrs. Butler: Is this really all that the hon. Gentleman can do? Would it not be possible for him still further to restrict the period during which fireworks are on sale and the age of the children to whom they can be sold? Could he not send a circular to local authorities encouraging them to organise public fireworks parties to which parents and children can be invited instead of their having their own? This would not need legislation.

Mr. Woodhouse: My right hon. Friend is always willing to consider fresh suggestions of this kind, but the hon. Lady will see from the Answer that in co-operation with the industry we have succeeded in eliminating what is probably the most serious danger in fireworks, that is the cheap banger, and the increased publicity which they have undertaken to put out this year will help, we believe, to reduce accidents substantially.

Mr. Allason: Would my hon. Friend agree that if fireworks manufacturers are co-operating so successfully in this, no restrictions can possibly be necessary as long as this co-operation continues?

Mr. Woodhouse: I certainly agree that co-operation with the industry is the most effective way of reducing danger, though, of course, neither that nor legislation can safeguard against carelessness in the use of fireworks, which is one of the most common causes of accidents.

Police Escort Duties (Road Vehicles)

Mr. Gibson-Watt: asked the Secretary of State for the Home Department what was the total of fees paid to the police in the Metropolitan area by industrial owners of over-sized loads on the roads for their services in piloting them through the area during the last 12 months.

Mr. Woodhouse: No charge is made for the services of the police in escorting abnormal loads.

Mr. Gibson-Watt: May I ask two questions? First, why not? Secondly, how can I get hold of the figures of fees paid to the police throughout the country for this service, in view of the fact that a great number of large loads are carried, thus making the problem of the roads very difficult?

Mr. Woodhouse: In reply to the first question, the reason is that it is the duty of the police to regulate all traffic, and regulating these abnormal loads is just as much in the general interest of road users as it is in the general interest of the owners of the loads. As to the second part of the supplementary question, I can only suggest that my hon. Friend should put down a Question.

Mr. Gibson-Watt: Would my hon. Friend be kind enough to tell me to which Minister I should address such a Question? Secondly, with regard to his earlier answer, does he appreciate that the fact that there is no fee to be paid to the police encourages industrial owners to put these large loads on the roads, to the great inconvenience of many people?

Mr. Woodhouse: The suggestion in the second part of that supplementary question is not entirely true, because the Commissioner has to be notified in advance of any movement by road of an abnormal load. He can then decide the route which it has to take, and he can also decide whether or not a police escort is needed. There is also a requirement for authorisation by the Minister of Transport for the movement of loads above certain dimensions and weight. As to the first part of that supplementary question, I think it would be best if my hon. Friend would write me a letter.

Mr. Gibson-Watt: On a point of order, to save my writing my hon. Friend a letter, I beg to give notice that I shall seek to raise the matter on the Adjournment.

Radcliffe Tribunal

Mr. M. Foot: asked the Secretary of State for the Home Department, if he will make a statement on the financial assistance to be provided for those who appeared before the Radcliffe Tribunal.

Mr. Brooke: The Office of the Treasury Solicitor has invited the soli-

citors whose clients were granted legal representation before the Tribunal to submit their bills of costs, if they desire to do so. The Treasury Solicitor will then ask the Tribunal to advise whether a claim from each particular applicant for an ex gratia  contribution from public funds should be entertained and, if so, what proportion of the reasonable costs incurred the contribution should represent. If the Tribunal favour the application, the Treasury Solicitor will then negotiate with the applicant's solicitor as to the amount of costs, including disbursements, which can be regarded as reasonable. If agreement cannot be reached on this point, the assistance of the Chief Taxing Master of the High Court will be sought.

Mr. Foot: Will all these figures be published so that we can see what has actually happened? Has the Home Secretary taken note of the fact that apparently members of the Government are proposing to take legal action, partly at least, as it is said, to recoup themselves for expenses involved in connection with the Tribunal? Does he not think this is a very curious procedure and, it may be, an improper use of the findings of the Tribunal to use them to influence the courts later, particularly as those who have suffered injustices in the course of the proceedings of the Tribunal have no remedy whatsoever?

Mr. Brooke: I think we had better take this one step at a time. The whole House agreed that the Tribunal should have an opportunity of expressing a view as to whether applications for ex gratia contributions should be entertained. That is the stage which we have now reached. Surely we should give the Tribunal an opportunity to express its views when the applications have been received.

Mr. Fletcher: In view of the general public importance of this matter, will the Home Secretary make representations to the effect that it would be most desirable that the Tribunal, whilst considering these applications, should sit in public?

Mr. Brooke: I think this really must be a matter for the Tribunal itself and that I ought not to interfere.

Proceedings before Examining Justices (Report)

Mr. D. Foot: asked the Secretary of State for the Home Department whether Her Majesty's Government have now considered the Report of the Departmental Committee on Proceedings before Examining Justices, which was presided over by Lord Tucker and reported on 10th July, 1958; and whether they have arrived at any decision on the recommendations contained in the Report.

Mr. Brooke: An undertaking was given during proceedings on the Criminal Justice Administration Act, 1962, that the Government would undertake an inquiry into the nature and purpose of committal proceedings. This is in progress, and until it has been completed no decision can be taken on the Departmental Committee's recommendations.

Mr. Foot: Does the right hon. Gentleman realise that the recommendations were arrived at unanimously by a very authoritative Committee, that they are a matter of great importance in the administration of justice and, when we are dealing with the administration of justice, how many years does the right hon. Gentleman need to make up his mind?

Mr. Brooke: It is not a question of my needing time to make up my mind. While the Government have undertaken an inquiry to decide whether there should be any fundamental change in the form of committal proceedings, it surely would be premature to reach a decision on the single question of what publicity should be allowed to these proceedings.

Fire Precautions (Gas Cylinders)

Mr. Wainwright: asked the Secretary of State for the Home Department if, in view of the danger to fire-fighting personnel when a fire breaks out near a place containing cylinders of propane and butane gases, he will take steps to ensure stricter precautions in the storage of gas cylinders.

Mr. Woodhouse: My information is that the danger arises principally in connection with the storage of these substances in industrial premises and building and road works sites. I understand

that my right hon. Friend the Minister of Labour is preparing regulations under the Factories Act, 1961, which will inter alia, require precautions to be taken in respect of the storage and use of these substances in all such premises; and he hopes to have draft regulations ready for circulation to interested bodies in the near future.

Mr. Wainwright: I am much obliged for that reply. Will the hon. Gentleman urge on his right hon. Friend the need for these gas cylinders to be stored in a separate building away from where they are normally used and to make certain that only the minimum number of cylinders is in the building where the industrial or other works are being undertaken?

Mr. Woodhouse: I will convey those points to my right hon. Friend. The draft regulations will be circulated to interested parties before they are tabled.

Mr. Hector Hughes: Will these regulations be of nation-wide application, including Scotland, or will they apply only to local fire-fighting personnel.

Mr. Woodhouse: I understand that they will be nation-wide.

Mr. Wainwright: Will the Minister make certain that the fire officers and the Fire Brigades Union are consulted on what kind of measures should be taken to ensure the greatest safety in the storing of these vessels?

Mr. Woodhouse: I will convey that point to my right hon. Friend. Of course, the fire authorities will be among those to be consulted.

Radiation Detection Posts

Mrs. Butler: asked the Secretary of State for the Home Department what is the purpose of the network of radiation detection posts now being built; and if he will make a statement.

Mr. Brooke: The purpose of these posts is to enable the Royal Observer Corps to measure radioactivity in the event of nuclear attack on the United Kingdom, and to enable fall-out warnings to be given to the public. The development of the warning and monitoring system has been referred to in Defence White Papers.

Mrs. Butler: Is there any intention to use these posts in conjunction with present arrangements for detecting radioactive fall-out from nuclear tests and the effect on food, water and general health? Is the Home Secretary proposing to use them in peace-time?

Mr. Brooke: These are for war-time use.

Prisoners (Accommodation)

Mr. Lubbock: asked the Secretary of State for the Home Department if he will circulate in the OFFICIAL REPORT, a list of prisons in London and the Home Counties, giving the number of prisoners in each, and the number sleeping three to a cell in each.

Miss Pike: Yes, Sir. I will, with permission, circulate, the figures in the OFFICIAL REPORT.

Following are the figures:

7TH MAY, 1963*


Prison
Population
Three in a Cell


Prisons for Men




Brixton
777
255


Pentonville
1,392
654


Wandsworth
1,606
597


Wormwood Scrubs
1,125
327


Chelmsford
219
—


Maidstone
428
—


Canterbury
363
273


Eastchurch
520
—


Bedford
244
126


Aylesbury
119
—


Grendon
91
—


Spring Hill
147
—


Ford
411
—


Lewes
271
—



7,713
2,232


Prisons for Women




Holloway
437
—


Hill Hall
49
—



486
—


* The latest date for which both sets of figures are readily available.

Chief Enahoro

Mr. Paget: asked the Secretary of State for the Home Department on what date he saw the Lord Chief Justice about

the Enahoro case; and whether he then informed him that the Nigerian Government proposed to exclude Mr. Foot and Mr. Gratiaen should they present themselves as counsel for Chief Enahoro.

Mr. Brooke: No, Sir. My consultation with the Lord Chief Justice was on 5th March. The information referred to was not given to me by the Nigerian authorities until 9th March.

Mr. Paget: Did the right hon. Gentleman at any time give the Lord Chief Justice that information? Did he ever give the Attorney-General that information, or did he allow the Attorney-General to read his affidavit and thus cheat the courts as an innocent instrument?

Mr. Brooke: I certainly cannot accept that sort of implication. I said in the debate on Monday—if the hon. and learned Gentleman had listened that the information given me by the Nigerian authorities was in the possession of the Government as a whole. I had only that one consultation with the Lord Chief Justice, which took place before I had received the confidential communication from Nigeria.

Mr. Fletcher: Will the Home Secretary say why, when he did receive the information from the Nigerian Government, he did not pass it on to the Lord Chief Justice?

Mr. Brooke: It did not occur to me that it was for me to do that.

Mr. Paget: Will the right hon. Gentleman tell us fairly and squarely: had he told the Attorney-General prior to 22nd April when he signed the affadavit that my hon. and learned Friend the Member for Ipswich (Mr. D. Foot) and the other Queen's Counsel would not be admitted to Nigeria?

Mr. Brooke: Yes; I have said that now two, if not three, times.

Oral Answers to Questions — COAL

Home-Grown Timber

Mr. Vane: asked the Minister of Power whether he will forecast the approximate demand by the National Coal Board for home-grown timber for roof support over the next 10 years or any shorter period.

The Parliamentary Secretary to the Ministry of Power (Mr. John Peyton): Requirements for pit timber are a matter for the National Coal Board. I am therefore asking the Chairman to write to my hon. Friend.

Mr. Vane: Will my hon. Friend ask the Chairman to give me a certain amount of detail, since, as the National Coal Board is the largest single customer of the whole industry, either public or private, it is important that we should in future have more information than we have had in the past?

Mr. Peyton: I have no doubt that the Chairman of the National Coal Board will read what my hon. Friend has just said with interest.

Mr. Peyton: I have no doubt that the Chairman of the National Coal Board will take careful note of what my hon. Friend has said. With interest.

Mr. Gibson-Watt: No doubt, my hon. Friend sees Lord Robens from time to time. Will he press on him the need to have regard to the business of homegrown hardwood production and to use as much as possible in the National Coal Board's work?

Mr. Peyton: As I have said, this is a matter for the National Coal Board. I have no doubt that Lord Robens will bear in mind what both my hon. Friends have just said.

Collieries (Storage Bunkers)

Mr. Webster: asked the Minister of Power what approval he has given to proposals for major capital expenditure by the National Coal Board to increase the number of collieries with storage bunkers and facilities for rapid loading of trains.

Mr. Peyton: The National Coal Board is discussing these matters with the Railways Board but has not yet made any proposals for additions to its investment programme in this respect.

Mr. Webster: I am grateful to my hon. Friend for that Answer. This is a vital matter. There are about 22 million wagons involved, each for about two days on every turn-round, and the cost is about £11 million a year. Would not this development accelerate the operation of the railway system and bring costs down as a result of more efficient methods?

Mr. Peyton: I have no doubt that the Chairman of the National Coal Board will take careful note of what my hon. Friend has said.

Smokeless Fuel (Salford)

Mr. Frank Allaun: asked the Minister of Power what reply he gave to Salford City Council regarding the price and quality of smokeless fuel and the setting up of local consumer councils to deal with smokeless fuel problems.

Mr. Peyton: The council has been told that the suppliers of smokeless fuels are responsible for their price and quality and that, as machinery for investigating complaints already exists, the creation of new local consumer councils is not necessary.

Mr. Allaun: But does not the hon. Gentleman agree that the Domestic Coal Consumers' Council, a national body, is far too remote for most aggrieved housewives? Why cannot we have local councils as in the gas and electricity industries?

Mr. Peyton: No, Sir; I do not agree at all.

Oral Answers to Questions — MINISTRY OF POWER

Pipelines

Mr. Warbey: asked the Minister of Power if, before granting a pipeline authorisation for any major new pipeline development under Section 1 of the Pipe-lines Act, he will make a report to the House of his preliminary conclusions on the applications submitted to him.

Mr. Peyton: No, Sir.

Mr. Warbey: Will the hon. Gentleman bear in mind that his right hon. Friend will, in many circumstances, have to deal with competing applications involving substantial financial interests, and that, in order to ensure that the public interest is served in reaching a decision in such cases, it would be highly desirable for him not only to do justice but to see that justice is done publicly? Would not the method of preparing something like a draft scheme before coming to a final determination in such cases be very helpful to the Minister?

Mr. Peyton: I am sure that my right hon. Friend will be very grateful for the hon. Gentleman's advice, but I think it most unlikely that he will accept it. My right hon. Friend has every intention of following the procedure laid down by Parliament in the recent Act.

Mr. Warbey: Will the hon. Gentleman take a slightly more serious view of a suggestion put forward to assist his right hon. Friend to carry out the intentions of the Pipe-lines Act, which were that the Minister should act in the public interest?

Mr. Peyton: I should hate to give the impression that my right hon. Friend would not give very serious consideration to any advice offered by the hon. Gentle-man. [HON. MEMBERS: "Oh."] A great deal of it was offered during the proceedings on the Pipe-lines Bill.

Mr. Shinwell: Is not the Parliamentary Secretary aware that the type of answer which he gives to hon. Members on this side is not the type that we expect from someone sitting on the back benches? We expect rather more courtsey from the Front Bench.

Mr. Peyton: I assure the right hon. Gentleman that no discourtesy was intended. I merely said that my right hon. Friend will seriously consider any advice given to him in this House.

PRESIDENT DE GAULLE

Ql. Mr. W. Hamilton: asked the Prime Minister what plans he has for an early meeting with President de Gaulle.

The Prime Minister (Mr. Harold Macmillan): There are no plans for an early meeting between me and President de Gaulle.

Mr. Hamilton: Would the right hon. Gentleman agree that the time is now right to take some positive steps to renew our traditional friendship with France and to stop making these rather futile gestures of petulance which followed the breakdown of the Common Market negotiations?

The Prime Minister: . That is another question. Of course, I have had many meetings with President de Gaulle and hope to do so again.

FOREIGN SECRETARY (SPEECH)

Mr. Zilliacus: asked the Prime Minister whether the Foreign Secretary's public speech at the Canadian Club in Ottawa on 21st May, on the subject of the retention of British nuclear weapons, represented the policy of Her Majesty's Government.

The Prime Minister: I would refer the hon. Member to the reply which I gave to the hon. Member for South Ayrshire (Mr. Emrys Hughes) on 28th May.

Mr. Zilliacus: As the reply was "Yes", perhaps the Prime Minister could elaborate by explaining why he authorised his Foreign Secretary to diminish or demolish his own stock argument for an independent British deterrent by saying that we did not need it for fear of being left alone in a crisis by our allies, nor to acquire prestige, namely, greater weight in the counsels of nations? Why did he then allow him to put forward the Alice in Wonderland argument that we must have an independent nuclear deterrent because of the danger of the idea spreading to other countries? Finally, would the right hon. Gentleman not consider issuing an authorised version to his colleagues for telling the tale to the public instead of creating confusion by allowing them to ad lib in this way?

The Prime Minister: We had a number of Questions and Answers on this subject the other day. We have had long debates on it, and I do not think I can add to it by further question and answer.

TRAFFIC DIVERSIONS, ISLINGTON (PETITION)

Mr. Reynolds: asked the Prime Minister what reply he has sent to the petition delivered to him on Monday, 20th May, by residents in the Archway area of the Metropolitan Borough of Islington, on the subject of proposed traffic diversions at the Archway.

The Prime Minister: I asked the Minister of Transport, whose responsibility it is, to reply to the petition, which he did yesterday.

Mr. Reynolds: Will the right hon. Gentleman look into this matter again?


Is he aware that there are two proposals here, one for a peak-hour clearway on a main road, and the other for a one-way scheme which will put over 1,000 heavy vehicles an hour through completely residential streets? Would the right hon. Gentleman see whether it cannot be possible to try out a peak-hour clearway first, to see whether that gives sufficient benefit which may render the one-way diversion unnecessary?

The Prime Minister: I will certainly convey that to my right hon. Friend.

DEFENCE REORGANISATION

Mr. Shinwell: asked the Prime Minister what decision has now been reached by Her Majesty's Government on the integration of the United Kingdom defence organisation; what Departments are to he included; and what will be the designation of the respective Ministers.

The Prime Minister: The principles of the proposed defence reorganisation were outlined by my right hon. Friend the Minister of Defence during the Defence debate. Detailed plans will be published in the promised White Paper, I expect in the next month or so.

Mr. Shinwell: Can the Prime Minister say whether it is intended that military research into weapons and the like will be concentrated in the new Ministry of Defence organisation, and will he also say whether it is true that it has been decided by the Government not to include in the Ministry of Defence new integrated organisation the Ministry of Civil Aviation in so far as it occupies itself with military aircraft?

The Prime Minister: I am sure the right hon. Gentleman will appreciate that we had a debate on these matters. We are working hard on the elaboration of our proposals. We hope shortly to publish a White Paper, and it would be a mistake for me to give premature answers to Questions on matters which are under consideration.

Mr. Shinwell: Does not the right hon Gentleman realise that this is a matter of prime importance and all that one is trying to do is to offer some guidance to the right hon. Gentleman before he finally makes up his mind? We want to avoid any further mistakes in the creation of a sound military defence organisation.

The Prime Minister: I quite under. stand the right hon. Gentleman's motives, for which I am grateful, but I still think he will agree that it would be a mistake to announce decisions which cannot be taken till the next stage when we have the White Paper ready.

Mr. H. Wilson: I think I am right in saying that this reorganisation was first adumbrated by the Prime Minister himself when about eight years ago, as Minister of Defence, he announced that he was working on these lines then. Is the right hon. Gentleman in a position to answer one question which was regarded in the defence debate as fairly central to the reorganisation, namely. whether there will be one accounting officer in the new organisation or three, or four? Has a decision been taken on this yet?

The Prime Minister: That is a fairly complicated point about which I hope to have a clear view by the time the White Paper comes; in fact, it is an essential part of the White Paper. But it is not quite as simple an issue as It may appear.

NUCLEAR TESTS

Mr. A. Henderson: asked the Prime Minister whether President Kennedy and he have made further joint proposals to Mr. Khrushchev with a view to the achievement of a nuclear test-ban agreement.

The Prime Minister: I expect to approve later today the final text of a message which President Kennedy and I are sending to Mr. Khrushchev. I hope that the message will be delivered tomorrow.

Mr. Henderson: I welcome the continued efforts of President Kennedy and the Prime Minister to end the present deadlock at Geneva, but may I ask the right hon. Gentleman again to consider consulting President Kennedy on the desirability of both our countries unilaterally declaring that they will not resume atmospheric and sea-water tests?

The Prime Minister: That we have often discussed, but the object of our hopes is still to get it agreed by the Soviet Government, and I think that we had much better wait to see whether we can achieve a universal ban by agreement.

Mr. Driberg: asked the Prime Minister if he will obtain from the President of the United States of America information on the nature and number of the new series of nuclear tests recently begun in Nevada; and if, in view of the fact that this resumption of testing was announced only two weeks after his and the President's letter to Mr. Khrushchev urging speedier progress towards a test ban agreement, he was consulted in advance on the timing and content of the announcement.

The Prime Minister: President Kennedy announced last November that underground nuclear weapons tests were continuing in Nevada. It was announced on 9th May that, as an extension of these tests, three sub-kiloton detonations, two of them nuclear, would be set off. One of very low yield was to be detonated at ground level; but it was announced four days later that these three tests would not take place.

Mr. Driberg: Has any test in fact taken place since 9th May? Further, when the Prime Minister says that a detonation was to have taken place at ground level, does that description not tend to disguise the fact that this would actually have been an atmospheric test?

The Prime Minister: The important point is that, so anxious is the President not to do anything which would interfere with our present negotiations, these tests have been cancelled.

BUSINESS OF THE HOUSE

Mr. H. Wilson: May I ask the Leader of the House to state the business of the House for the week after the Recess?

The Chancellor of the Duchy of Lancaster (Mr. Iain Macleod): Yes, Sir. The business for the first week after the Whitsun Adjournment will be as follows:

MONDAY, 17TH JUNE—Supply [20th Allotted Day]: Committee.

Debate on the Provision for Higher Education, on the appropriate Votes.

TUESDAY, 18TH JUNE—Remaining stages of the Remuneration of Teachers Bill, and of the Local Employment Bill.

WEDNESDAY, 19TH JUNE—Second Reading of the Peerage Bill.

Second Reading of the Commonwealth Development Bill, and Committee stage of the Money Resolution.

THURSDAY, 20TH JUNE—Supply [21st Allotted Day]: Committee.

Debate on Industry and Employment in Scotland, on the appropriate Votes.

FRIDAY, 21ST JUNE—Private Members' Bills.

Mr. H. Wilson: Does the right hon. Gentleman still have in mind that the House will wish to have at an early date a two-day debate on foreign affairs, some time of which we will want to devote to the question of disarmament and the test ban agreement? Will the right hon. Gentleman say that this is very much in his mind for inclusion in the programme?

Mr. Macleod: The Leader of the Opposition is increasing the bidding, as he knows. There was no mention of a two-day debate the last time that it was discussed. [HON. MEMBERS: "Yes, there was."] No, there was not. Of course, we will have discussions through the usual channels, but I am not committed to anything beyond that.

Mr. Wilson: If I may say so, I think; that the right hon. Gentleman's memory is at fault, because the idea of a two-day debate has been mentioned throughout. We are agreeable that there should be discussions through the usual channels about the necessary mechanism of securing a two-day debate, but, certainly, all along we have said that we would want, and I am sure that the whole House would want, a two-day debate.

Dame Irene Ward: Did my right hon. Friend happen to notice last week that there was a protracted debate on one of the fishing Orders and that all the Members who spoke in it, owing to the unsatisfactory position of the fishing industry, said that there should be a further debate on the subject? When may we have that debate, and can it start at an appropriate hour?

Mr. Macleod: It is very difficult to take the vast numbers of Orders which have to be passed by the House at any other time than at the end of the day's business, which is ten o'clock, or sometimes even later. I have noted the views


expressed by hon. Members on both sides and I will in due course take them into account.

Dame Irene Ward: Give us a day.

Mr. C. Pannell: Will the right hon. Gentleman bear in mind the implied promise that we had some time ago that we should have a half-day debate on this building and the necessity to extend it in the interests of hon. Members?

Mr. Macleod: There has been an undertaking for some time that we will have a debate on accommodation this Session, and I should like to discuss at an appropriate stage how best that can be arranged.

Mr. Brockway: Since the right hon. Gentleman gave me an undertaking that he would consider my request for facilities for my Bill against racial discrimination and incitement when the Home Secretary made his statement, since it is likely that that statement will be made very soon, will the right hon. Gentleman now consider giving facilities for that Bill, which includes a provision against racial discrimination in public places, and which is not likely to be covered in any statement which the Home Secretary makes?

Mr. Macleod: I think that we should await the statement which will be made in a very few minutes' time. There are two statements to be made. The first will be made by the Chancellor of the Exchequer and then a statement will be made on this particular point by the Home Secretary.

Miss Vickers: Is my right hon. Friend aware that a day is owing to the Estimates Committee for discussion of its Reports? Will my right hon. Friend therefore consider discussion of House of Commons Paper 263 on the naval dockyards?

Mr. Macleod: It is correct that there is a day's discussion owing which we will, I hope, take some time between Whitsun and the Summer Recess. I do not think that it is for me to announce what the precise subject will be.

Mr. Mendelson: Further to the announcement by the right hon. Gentleman during business questions last week about the proceedings of the Ottawa Conference, with particular reference to the reorganisation of control of nuclear

weapons in N.A.T.O. and the discussions on a possible multilateral force, which is now an urgent matter, will the right hon. Gentleman give us an assurance that the Government will not commit this country to any such multilateral force before a debate has taken place and the House has had a chance to express its opinion?

Mr. Macleod: I do not think that that arises immediately on business. Naturally, all these matters will be in order if we can arrange the debate to which the Leader of the Opposition has referred.

Mr. Warbey: Is the right hon. Gentleman aware that the enlargement of the principle of colonial development to that of Commonwealth development represents a major step of very great importance and that we cannot possibly do justice to this matter on the same day as we discuss the Peerage Bill?

Mr. Macleod: We will see how we get on with those two Bills. The general change which is embodied in the Commonwealth Development Bill is, I think, entirely acceptable to the House. Indeed, many hon. Members on both sides have pressed for it for some time. But I will watch the course of business on Wednesday.

Mr. Iremonger: In view of the importance of increasing productivity, will my right hon. Friend find time to discuss in the House the Motion standing in my name and the names of many of my hon. Friends on the trade unions and national prosperity?

[That this House welcomes the satisfactory development of industrial relations at the Ford Motor Company's works at Dagenham anti the recent publication by the Trades Union Congress, entitled, Sweden—its Unions and Industrial Relations, which is intended to stimulate trade unionists in this country to take a more constructive part in. the affairs of their unions and to reexamine their function and purpose in the light of the needs of today and the prospects of tomorrow with the object of increasing prosperity by removing obsolete restrictive practices, eliminating unofficial strikes, increasing the mobility of labour, and co-operating in the schemes of training and re-training initiated by Her Majesty's Government.]

Mr. Macleod: I could not give an undertaking about that.

Mr. Pavitt: Has the Leader of the House had any request from the Minister of Health to find Government time in the near future for a debate on the Government's ten-year plan for local health authority improvement and, if so, is the debate likely to take place immediately following the Recess?

Mr. Macleod: The answer to the first part of the hon. Gentleman's question is, "No, Sir." Therefore, the second part does not arise.

INTERNATIONAL LIQUIDITY

The Chancellor of the Exchequer (Mr. Reginald Maudling): I wish to announce a new step in the development of our policy on international liquidity problems.
In recent years we have strongly supported such developments as the increase in Fund quotas by 50 per cent., and the scheme whereby 10 major industrial countries, including Great Britain, stand ready to lend the Fund their currencies up to agreed limits.
In 1961, the Governors of the Central Banks evolved the system of mutual support, by which we obtained assistance of 910 million dollars in 1961 and 250 million dollars in February and March this year. In parallel with arrangements of this kind, the member countries of the European Monetary Agreement, including the United Kingdom, have also evolved an arrangement for effecting and reporting to each other measures of short-term assistance, and our friends in the Scandinavian countries have a similar arrangement under the Treaty of Nordic Co-operation.
The United States has, since 1961, negotiated short-term "swap" facilities and borrowing arrangements with a number of countries, including one of 50 million dollars with us.
We have been pursuing in international discussion methods of meeting the longer-term problems, including the scheme for a Mutual Currency Account which I proposed last September, and other possibilities. These discussions, to which Her Majesty's Government attach very great importance. are making useful progress.
We have now agreed with the United States Federal Reserve System on the provision of a reciprocal swap facility of 500 million dollars. This will be on a standby basis, to be activated at the request of either party if and when the need arises. The maintenance of the international payments system—of international liquidity, in fact—depends on the stability of the two major reserve currencies.
This new arrangement is a very concrete expression of the close co-operation which exists between the monetary authorities of our two countries. It will be of benefit not only to us, but to the strength and stability of the world payments system generally.

Mr. Callaghan: May I welcome the interest that the Chancellor is showing in this problem and say that we on this side, naturally, welcome the arrangement that has been made? I should, however, like to put three points to the right hon. Gentleman.
First, in view of the pressure in the United States to raise short-term interest rates, is he taking any steps to safeguard our position in relation to short-term money? Is there any chance of co-ordinating our policy so that the Americans do not raise their interest rates?
Secondly, is the Chancellor proposing to take any steps concerning the International Monetary Fund, where the Government have a standby credit of 1,000 million dollars, which will run out in August, so that we shall have access to the currencies of all countries, and not only to the dollar, during any period of pressure that may lie ahead?
Thirdly, while this step is welcome as far as it goes, does it not put us in the position where two currencies, both of which are liable to attack, may be trying to support each other? Does it not point to the necessity of expanding the monetary base for world trade on a permanent basis by strengthening the International Monetary Fund, so that we can both expand our trade here and also trade with the developing countries?

Mr. Maudling: I think it unwise for me to comment on the trend of short-term interest rates in this country, but to comment on the likely trend in the


United States would be even more dangerous. As to the standby, we are having discussions with the Fund about a number of things on the normal basis and I should not like to make a statement at this moment. I think, however, that the availability of the standby has been generally recognised as being beneficial.
In reply to the third point, I accept that this is not a solution to the long-term problem. It is a very big problem which will take a long time finally to solve. Meanwhile, however, it greatly increases the co-operation between the two key currencies, the dollar and sterling. Anyone who tried to make a simultaneous attack on those two would be taking on a formidable target.

Mr. Callaghan: If the Chancellor is not able to do anything about coordinating short-term interest rates, will the swop of 500 million dollars be available to defend our own position if a rise in the short-term interest rates in New York were to encourage money to flow from here across the Atlantic?

Mr. Maudling: We are always trying, through the O.E.C.D. particularly, to get more co-ordination in short-term money rates, and money rates generally, but certainly, in so far as movements in money rates in various capitals affect the flow of short-term money, arrangements of this kind are available to iron out the difficulties.

Sir H. d'Avigdor-Goldsmid: Is my right hon. Friend aware that his initiative in extending our liquidity and increasing our reserves comes particularly welcome at this moment when our balance of payments is suffering major blows on Epsom Downs? Does he bear in mind that no system will work which does not take into account the interest of the creditor Powers as well as the debtors, the United States and ourselves being debtors? Can he enlist the support of the creditor Powers in this useful initiative which he has proposed?

Mr. Maudling: I am happy to say that not every balance of payments suffered at Epsom Downs yesterday.
On the broader issue, there is a great deal of substance in what my hon. Friend says. But the purpose of this arrange

ment is to strengthen the co-operation between the two currencies which are in a unique position. It is because we are debtors that the world has our money with which to finance trade.

Mr. Lubbock: To use a point raised by the hon. Member for Cardiff, South-East (Mr. Callaghan) about the pressure which sometimes occurs on the £ and dollar simultaneously, may I ask whether it would not have been helpful if the Chancellor could have negotiated similar arrangements with the E.E.C. countries at the same time?

Mr. Maudling: We have, of course, the arrangements of the so-called Basle Agreement, which were very useful to us in February and March.

PUBLIC ORDER

The Secretary of State for the Home Department (Mr. Henry Brooke): With permission, I would like to make a statement about public order.
As promised in my statement of 8th November last, the Government have reviewed the adequacy of the law relating to public order in the light of the two cases which have, since then, been before the courts.
In one case, Colin Jordan, leader of the so-called National Socialist Movement, John Tyndall, its national secretary, and two other members of it were charged under Section 2 of the Public Order Act, 1936, with running a quasi-military organisation. They were found guilty at the Central Criminal Court on 15th October and sentenced to varying terms of imprisonment.
Jordan and Tyndall sought leave to appeal against their convictions and sentences, but this was refused by the Court of Criminal Appeal on 9th November. They have since been serving their sentences.
In the other case, Jordan and Tyndall had been convicted by the Magistrate at Bow Street on 20th August last of using, in Trafalgar Square on 1st July, insulting words whereby a breach of the peace was likely to be occasioned, contrary to Section 5 of the Public Order Act.
Both appealed to quarter sessions appeal against conviction was allowed against conviction and sentence. Jordan's


Tyndall's appeal against conviction was dismissed, but a fine of £10 was substituted for the sentence of imprisonment.
The chairman of quarter sessions was asked to state a case for consideration by the Divisional Court, which decided on 19th March, 1963, that the appeal should not have been allowed and that Jordan had been rightly convicted by the Magistrate. The Lord Chief Justice said in the course of his judgment that
 a man was entitled to express his views as strongly as he liked … but he must not threaten, abuse or insult by hitting with words".
An application for leave to appeal to the House of Lords was subsequently refused, and the case was sent back to quarter sessions, where a sentence of one month's imprisonment was imposed.
The Government are determined that extremists should not be allowed to provoke violence by stirring up racial hatreds. The action so far taken under the existing law has been effective, and offenders have been punished.
The immediate action required is to strengthen the penalties for offences under the Public Meeting Act, 1908, and Section 5 of the Public Order Act, 1936. A Bill for this purpose is being introduced forthwith in another place.
The people of this country are united in their detestation of Fascism and in their determination not to allow abuse of free speech by extremists, leading to breaches of the peace.
The police can be relied on to enforce the law with vigour; and I would remind the House that the sanctions provided by the existing law do not rest entirely on statute law, and that a person who speaks words or publishes matter calculated to provoke a breach of the peace, with the intention of stirring up hatred or hostility between different classes of the Queen's subjects, is guilty of the common law misdemeanour of sedition.
That offence extends to the stirring up of hatred or hostility on the ground of race; and it is punishable by fine and also by imprisonment, the amount of the fine and the term of the imprisonment being entirely at the court's discretion.
It will be the duty of the Government to watch the situation closely, and if

further legislative action be found necessary we shall not hesitate to take it, for we are determined that the law shall be fully adequate to deal with any persons or groups whose words or actions give rise to breaches of the peace.

Mr. Fletcher: I am sure that the whole House will welcome the general sentiments expressed by the Home Secretary, in particular when he said that the Government are determined that extremists should not be allowed to provoke violence by stirring up racial hatred. We also welcome his statement of intention to increase the penalties under the existing law.
While I appreciate what the right hon. Gentleman has said about common law misdemeanour, however, many of us on this side do not agree with the conclusion that he has drawn from the recent case of Jordan. We consider that it would be far more satisfactory to amend Section 5 of the Public Order Act, making a specific offence by inserting the words "calculated to incite to racial hatred".

Sir K. Pickthorn: On a point of order, Mr. Speaker. I should like to know whether other hon. Members, who have not had the advantage of seeing this statement on paper, will also be entitled to put views for or against the Government's intentions when the hon. Member for Islington, East (Mr. Fletcher) has finished his speech?

Mr. Speaker: I do not think that the hon. Member for Islington, East (Mr. Fletcher) was very far out of order. He had rather a complicated matter to explain before he could formulate a question. We have to have a little mercy about this, but I must confess to some concern about the length of discussions which arise on statements.

Mr. Fletcher: My specific question is this: will the right hon. Gentleman give an assurance that the terms of the Long Title of the Bill will be drawn sufficiently widely to enable us to put down Amendments, on the lines I have suggested, to Section 5 of the 1936 Act?

Mr. Brooke: I must ask Parliament to await the publication of the Bill. I know the hon. Gentleman's views about the case for amending Section 5 of the 1936 Act, but, at the same time, it is exceedingly


difficult to see what would be added to existing powers by inserting a reference to words such as "inciting hatred of any racial group", because it is extraordinarily hard to see how any words of that character could not be called "threatening, abusive or insulting" and, therefore, regarded as constituting an offence under existing law.

Mr. Iremonger: Is my right hon. Friend aware that many of us on this side of the House will greatly regret that the Government have decided that no useful purpose would be served by making it clear beyond doubt—far more clear than it is now under the common law and decided cases—that incitement to hatred on sectional grounds is a serious and punishable offence?
Will my right hon. Friend consider introducing the new Bill, if present legislation has not got this characteristic, with a sufficiently widely drawn Title to enable a new Clause to be tabled and debated'? Will he also ensure that the Committee stage is taken on the Floor of the House and not in Standing Committee? Will he consult with the Leader of the House on these points?

Mr. Brooke: I think that Parliament must await the terms of the Bill. As / have said, the Government are determined that the law shall be adequate to deal with any person or groups whose words or actions result in breaches of the peace and that if further action is found necessary we shall not hesitate to take it.

Mr. H. Wilson: Is the right hon. Gentleman aware that this is a matter which the House must determine and not the Government? In view of the strong feeling on both sides of the House on this—this is not a party matter it cuts across party differences—will not he agree to hold back the Bill until he has had a chance to consider whether it fulfils the conditions laid down by my hon. Friend the Member for Islington, East (Mr. Fletcher) and the hon. Member for Ilford, North (Mr. Iremonger)—in other words, that it should include the suggested additional passage, or that it be drafted in such a way that it will be in order to move the inclusion of that passage?
Secondly, the right hon. Gentleman has now said twice that we must await

publication of the Bill, but did he not say in his statement that it is being introduced first in another place'? Would not he agree that this raises matters of considerable constitutional importance, particularly if the Bill acts as we think all hon. Members on both sides want it to'? Will he ask the Leader of the House to introduce the Bill into this House first and see that it is in wide enough terms to enable this House to declare its views?

Mr. Brooke: The view of the Government is that the urgent thing here is to get the penalties increased at the earliest possible moment. We are most likely to get the Bill quickly on the Statute Book if it starts its progress in another place. But the fact is that there is no evidence at all up to the present that the existing law is inadequate to deal with these hateful offences.

Mr. Skeet: is my right hon. Friend aware that considerable difficulties are likely to arise here, and that any astute agitator can drive a coach and horses through the provisions of Section 5 of the 1936 Act? I would have thought that if clarification was required—and in my view it is required—it would have been right to have allowed Parliament to lay down what the Section should say and not leave this to the interpretation of the courts.

Mr. Brooke: I am advised by the police that there is now no doubt whatever about interpretation [HON. MEMBERS: "Oh."]—about taking action on Section 5 of the 1936 Act and that the Section has been fully adequate to deal with any situation that has arisen up to now. If future situations arise for which Section 5 is not found to be adequate the Government will be prepared to go further.

Mr. H. Wilson: The right hon. Gentleman keeps on saying that there is no evidence. That means that he thinks that there is no evidence. Is he aware that the House is getting a bit tired of exculpatory statements and that the House as a whole, and not the right hon. Gentleman, should decide this? Will not he look again at the point about the drafting of the Bill?
If it has been introduced in another place—in the view of some of us, quite improperly since it is a constitutional Measure—will he at least ensure that


when it comes here the Title is wide enough to enable this House to examine it from the point of view expressed by hon. Members, and that he will not confine our discussions to a quite narrow point just because he thinks that a narrow point is good enough?

Mr. Brooke: The Government must decide on the terms of what legislation to present to Parliament and in which House to present it. I can only repeat that at present there is no evidence that the existing law under Section 5 is proving inadequate. If it is found to be inadequate we shall remedy it.

Sir B. Janney: While appreciating the points that have been made by the right hon. Gentleman, I ask him again to reconsider the questions raised from this side of the House. Will he realise that there is very strong feeling in the House? Is he aware that, for example, placards and posters are being exhibited acclaiming the arch-sub-beast Hitler and his followers and that these are in themselves conducive to racial discrimination? Will the Government include a provision to ensure that the exhibition of posters and placards of that nature is prohibited? Before the terms of the Bill are finally settled, will the right hon. Gentleman take into account the Declaration of Human Rights and the Convention on Genocide, which give ample scope for any civilised community to see to it that anything of the kind which happened in Hitler's time will not be tolerated now?

Mr. Brooke: We are not going to have in this country the kind of thing that happened in Nazi Germany. I know how the hon. Gentleman feels about this. He and I have discussed the matter. But I must ask him to await the terms of the Bill. Meanwhile, I hope that anyone who comes across offensive leaflets or posters or the like will bring them to the notice of the police immediately.

Several Hon. Members: rose—

Mr. Speaker: Order. We really cannot debate this without a Question before the House.

Mr. H. Wilson: On a point of order. Mr. Speaker. We have still not been told when the Bill is to be introduced in another place. [HON. MEMBERS: "Forthwith."] What does "forthwith" mean? Today, or tomorrow, or when?

[HON. MEMBERS: "Forthwith"] I am putting this question to the Home Secretary. [HON. MEMBERS: "A point of order?"] I am raising a point of order on the ground that the rights of the House are in question because we have been told to await the Bill. We have not been told when the Bill is to be introduced. Therefore, I am asking you, Mr. Speaker, whether we can ask the Home Secretary when it is to be introduced and in what form.

Mr. Speaker: I do not see that any point of order arises from that. I cannot make the Home Secretary answer. My recollection—and I am subject to correction—is that in one of his two questions the right hon. Gentleman the Leader of the Opposition asked when the Bill would be introduced. If he did ask that, I am not in a position, on a point of order, to compel the Home Secretary to answer.

BILLS PRESENTED

PEERAGE

Bill to authorise the disclaimer for life of certain hereditary peerages; to include among the peers qualified to sit in the House of Lords all peers in the peerage of Scotland and peeresses in their own right in the peerages of England, Scotland, Great Britain and the United Kingdom; to remove certain disqualifications of peers in the peerage of Ireland in relation to the House of Commons and elections thereto; and for purposes connected with the matters aforesaid, presented by the Prime Minister; supported by Mr. Brooke, Mr. Iain Macleod, Mr. Noble, and the Attorney-General; read the First time; to be read a Second time tomorrow and to be printed. [Bill 121].

COMMONWEALTH DEVELOPMENT

Bill to extend the area of operation and alter the name of the Colonial Development Corporation; and to amend sections 1, 4 and 6 of the Colonial Development and Welfare Act 1959, presented by Mr. Sandys; supported by Mr. Butler and Mr. John Boyd-Carpenter; read the First time; to be read a Second time tomorrow and to be printed. [Bill 122.]

Orders of the Day — FINANCE BILL

Considered in Committee [Progress, 29th May].

[Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

New Clause.—(ONE HUNDRED PER CENT. DISABLEMENT PENSIONS: RELIEF.)

The following section shall be added to Part VIII of the Income Tax Act 1952:—
If the claimant proves that during the whole of the year of assessment he has been in receipt of a war disablement pension or an industrial injury pension granted by the Ministry of Pensions and National Insurance and determined by reference to one hundred per cent. disablement, he shall be entitled to a deduction from the amount of income tax with which he is chargeable equal to (a) tax at the standard rate on one hundred pounds, less (b) the additional amount of income tax with which he would have been chargeable if instead of receiving his pension he had received as earned income an amount equivalent to the amount of his pension:
Provided that no one shall be liable by virtue of this section to pay any more tax than he would have been liable to pay, if this section had not been enacted".—[Mr. Houghton.]
Brought up, and read the First time.

4.0 p.m.

Mr. Douglas Houghton: I beg to move, That the Clause be read a Second time.

The Chairman: With this new Clause it will also be possible to discuss the new Clause No. 15, "One hundred per cent. disabled", the new Clause No. 16, "Relief for disabled persons", the new Clause No. 17, "Relief for grave disability", the new Clause No. 18, "Extension of relief under Finance Act 1960, s. 17", and the new Clause No. 67, "One hundred per cent. disability and constant attendance: extension of housekeeper allowance."

Mr. Houghton: These Clauses deal with different aspects of tax relief for disablement, and the Economic Secretary here has a wide choice of reform. The Clause I have just moved—No. 14—provides that a person who is 100 per cent. disabled within the meaning of the industrial injuries or war disablement schemes may be given tax relief at the

standard rate on £100 less the additional amount of income tax with which he would be charged if, instead of receiving pension, he had received as earned income an amount equivalent to the amount of pension. The purpose is to bring into the reckoning the amount of his disability pension as income at the earned income rate.
The new Clause, "One hundred per cent. disabled," provides for tax relief at the standard rate on £100 to those persons who are 100 per cent. disabled under the industrial injuries and war disablement schemes, and it goes a little wider so as to include a person who is disabled in an equivalent manner, and which, had the disablement been within the industrial injuries and war disablement schemes, would have been assessable at 100 per cent.
The new Clause, "Relief for disabled persons", deals with a slightly different point. It provides that where a person is incapacitated from exercising his normal trade or profession for the whole of the tax year, any taxable income he has would be subject to the provisions of age exemption or age relief, notwithstanding that he is under 65 years of age.
The new Clause seeking relief for grave disability provides that relief shall be given where a person is disabled as to 75 per cent. or more, and that the allowance to be given shall be reduced in the case of a person disabled as to 75 per cent. by a proportion of the relief given to a 100 per cent. disability case.
The Clause, "Extension of relief under Finance Act 1960, s. 17", deals with a taxpayer's wife who has been totally incapacitated throughout the year. It proposes to give to that taxpayer tax relief on £40, which is equivalent to the allowance given to a widow or widower with a young child who does not qualify for the relief for a resident housekeeper. The purpose is to bring within the scope of the concession given in the Finance Act, 1960, a taxpayer whose wife is totally incapacitated for the whole of the tax year.
This is all well-trodden ground in our debates, and hon. Members may wonder why, year after year, we persist in tabling these new Clauses when we are always turned down. The answer is that perseverance and persistence pay off in this


House if one sticks at it long enough. We are doing that, because the story of perseverance in matters of personal reliefs from taxation is certainly encouraging to those who are steadfast and physically strong enough to stand up to this year after year.
I will just refer briefly to some of the reforms that have come about as a result of pressing on the Government of the day the merits of particular cases. The housekeeper allowance is one example. The allowance for the widow or widower with a young child and no resident housekeeper is another. The counting of income of apprentices for child relief is another example. Small incomes relief —an entirely new relief given in 1955—is another instance of the result of persistence. In this case, one must give the credit to the hon. Lady the Member for Tynemouth (Dame Irene Ward).
The tapering of child relief in relation to the amount of a child's income was rejected time and again, but is now in this Bill for operation next year. Last year, we got a break-through on the question of disablement, albeit on the narrow issue of blind persons. The Committee will remember that it was only when the Government realised that the mood of the Committee was absolutely against their obduracy that they decided to submit to the will of the Committee, and introduced the new Clause on Report.
I echo my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman), who said yesterday that the prospects of reform in this sphere, as in other spheres, depend largely on how tough hon. Members opposite are disposed to be with their own Government on questions about which they feel strongly. There are exactly three hon. Members opposite to get tough with the Government. I am glad to see the hon. Member for Shipley (Mr. Hirst) present. He gets tough with the Government anyhow, whether he is supported by large numbers of his hon. Friends or not. I look forward to one of his characteristic denunciations of the inability of his own Government to realise that reform in this field is overdue.
I will pass, briefly, to the merits of the matter. We have a long way to go to finish the Committee stage of the Bill, and I wish to co-operate as much as possible. The argument against this type

of reform in our Income Tax is, first, that taxation would become more complex and more difficult to administer if the code of personal allowances became too elaborate. The argument is that we cannot attempt to reflect a wide variety of different personal domestic circumstances in our code of tax relief. On the whole, we are told, we have to stick to the simple things of life, like marriage, children, housekeepers and dependent relatives.
If people will have adopted children or illegitimate children, rules have to be made to deal with them, but we cannot escape from these complexities if we are to make allowances for children at all. Occasionally, we have to bring in Solomon to decide on the apportionment of a child allowance between two separated and disputing parents—disputing who ought to have the child allowance. There are bound to be different kinds of housekeeper—residential housekeepers, non-residential housekeepers and imaginary housekeepers.
As to dependent relatives, more and more now appear to live in the West Indies, Poland and other distant parts. They, of course, provide special difficulties of administration, but we either cope with them or we abandon the idea of giving allowances of this kind altogether. Counterfoils of postal orders alleged to have been sent to some dependent relative abroad have been discovered on occasion to have been cashed by the football pools. That is the sort of problem of administration from which the Inland Revenue cannot escape when dealing with the complexities of these matters. Nevertheless, the ramifications of Income Tax and all its works go on relatively smoothly, giving rough justice to many and injustice to some.
These new Clauses are confined to the question of disability. Here we come to the second leg of the argument, which is that disablement is a matter for the social services rather than for treatment under our system of taxation. I suppose that one could argue similarly about children; in these days of family allowances one might say that they ought to be provided for, in so far as provision is necessary, in the social services rather than by taxation. But we run side by side family allowances under


our social services and tax relief for children under our taxation system.
I can refer on the question of disablement to the second interim Report of the Royal Commission in 1954, Cmd. 9105. Hon. Members have undoubtedly gone over these paragraphs time and again in order to see what the Royal Commission said about the question of disablement. I quote from paragraph 201:
The taxpayer's own disability is hardly recognised under the existing system. Yet there are many kinds of disability (putting aside age, which is provided for by a special relief) so severe that they modify the whole conditions of a person's life and impose upon him a constant levy of extra expense that may fairly be said to affect the taxable capacity of his income.
We read in paragraph 202:
Our general conclusion is that grave disability ought to be the subject of allowance.
In paragraph 203 we read:
We thought it right to concentrate upon some extreme measure of disability, because, if there is to be an allowance at all, it should, at any rate initially, be related to personal circumstances which are reasonably capable of identification and which demonstrably set the person concerned apart from others.
That is why we have concentrated on grave disability. That is why the Government were able last year to accept relief of blind persons, who would in any case have come within the definition of grave disability. They were identifiable, they were certified under an acceptable scheme and the Inland Revenue were not put to any trouble or doubt as to who was a blind person within the meaning of the tax relief.
4.15 p.m.
As far as these Clauses relate to persons who are assessed as 100 per cent. disabled under the industrial injury and war disablement schemes, there would be no difficulty about identification. Such a condition of disablement is easily verifiable by reference to the Departments concerned. Where, however, there is an attempt to get a relief for equivalent disablement for a person not certified under one of the disability schemes as 100 per cent. disabled but who is nevertheless also totally incapacitated, there is greater difficulty of identification. But the Royal Commission foresaw that difficulty and took it in its stride, and it was of the opinion that it could be catered

for under a proposal for allowances for grave disability.
I know that the Chancellor and other Treasury Ministers have rejected this proposal before. I hope that what they did last year is an indication that they are no longer opposing these proposals on doctrinaire grounds, because the principle to which they were adhering so persistently in years passed was breached last year to the extent of admitting blind persons to the code of tax allowances. I know that this is the sort of thing Governments always fear—the twin bogies of reactions and repercussions. "If we give it to these people, then we shall be pressed to do it for somebody else. If we start on this we shall never be able to stop. First, it will be the blind, then it will be the 100 per cent. disabled under war and industrial injury schemes, and then it will be somebody else." That is what they say.
I think that we have to face these consequences when we make a change in the principles of taxation. We have to decide that we shall do something. We have also to decide where we shall stop if we do it. I am not asking that these proposals should be accepted solely because we did something for the blind last year. The reason I am stressing the concession given to the blind last year is simply that it seems that we no longer have to argue this matter as one of principle in our taxation system.
I believe that in this Bill we have gone a long way from past traditional thought on taxation in this country, and that to me represents a most significant departure from much which has held the field in fiscal thinking for the last century. That, I think, is hopeful, because although it means that to some extent we are abandoning the abstract and doctrinaire principle of equality, we are making our system of taxation more malleable, more flexible, more capable of adjustment to particular circumstances which we believe on social, personal or economic grounds is justified in the national good.
I ask the Minister to look at these proposals not in terms of a departure from principle but on their merits as a matter of justice to certain groups of gravely disabled people who are living lives very different from those of us who have our normal faculties. These people, as the Royal Commission said, are so


gravely disabled and have injuries or disablement
so severe that they modify the whole conditions of a person's life, and impose upon him a constant levy of extra expense that may fairly be said to affect the taxable capacity of his income.
Tax concessions should be given for the person gravely disabled; permanently 100 per cent. disabled, or, at the very least, 75 per cent. disabled; the person totally incapacitated for the whole of the year of assessment, who may have investment income, or may have a breakdown pension which will be taxable, and who, because he is under the age of 65, will have a burden of taxation probably greater than it would have been if he had been over 65.
This should also apply to totally incapacitated wives. In such cases, many moving letters are written to hon. Members at different times. For them, there is no tax relief unless there are young children. We are asking that a very modest relief should be given in that case, the tax on £40, widening the provisions of the concession of the 1960 Act to cover them.
The condition of the Committee at the moment is not one for making an impassioned or emotional appeal to the Minister, and I therefore keep my feelings under control. But these are grievous cases. We all know of them. We all want to help them. If our taxation system can be adjusted to their needs, I am sure that the rest of us, able-bodied, fully-sighted taxpayers, will feel that our contribution towards relief for them should be freely given in a spirit of thanksgiving for our own health and strength and as a very small demand on our own personal resources.

Mr. Bruce Milian: I should like to add a few brief words of support to my hon. Friend the Member for Sowerby (Mr. Houghton). As he said, the arguments about these and similar new Clauses are all very familiar. I have the uneasy feeling that the answer from the Government will also be the familiar answer that nothing can be done.
There is a very strong case for making some sort of concession in the case of grave disability. It is undoubtedly true that the person who is gravely disabled is often put to considerable expense in

ordinary living expenses, particularly when he follows an occupation. I remember that a case was recently drawn to my attention of a young woman who had been a poliomyelitis victim and who needed a small car in which to get about. She did not have a car under the National Health Service, but she had her own which she used to get to and from work. It was indispensable to her. Without it, she would not have been able to go to work. But she got no tax allowance, or any other kind of allowance, for the expense of running this small car. She was disqualified on the usual ground that travelling expenses to and from work are not allowed for tax relief purposes.
This is perhaps only a small example of the kind of thing which must be repeated by many thousands of gravely disabled people. They are put to extra expense, and if the principles of our taxation system will not be shattered by making this kind of concession, there seems to be a strong case for making some sort of special tax allowance.
My hon. Friend has already mentioned the argument about complexity. I should have thought that some of the new Clauses were a good deal less complex than, for example, the dependent relative's allowance, because in that allowance one has to deal with a relationship. Two people are involved and there is the opportunity for a certain amount of juggling and the pretence that money is being paid to a relative when it is not.
But in the case of people who are 100 per cent. disabled, tax relief is made through the taxation payment of the claimant himself, and the claimant is the person who is disabled. There is no question of any sort of relationship being involved and I should have thought that it would be very much easier administratively to make an allowance of this sort than it is to administer the dependent relative's allowance, say. I should have thought that on purely administrative grounds there was no serious difficulty about accepting any of the new Clauses, certainly not No. 14 or No. 15.
We have already made so many adjustments to our tax allowances and reliefs to take care of individual personal circumstances that it can no longer be a justification for refusing relief of this sort that we cannot go into individual circum-
stances in any detail. We already do that in many respects in personal taxation, and very little, if anything, in the way of principle would be involved if we were to make the allowances suggested. That must be particularly so since, as from 1962, there has been an allowance for blind persons.
There is another argument which could be brought against new Clauses of this sort, or any new Clauses introducing a new relief. It is the argument that the more we give these various reliefs, and the more we reduce the yield of taxation, the more we erode the taxation system at the base. That is a reasonable argument, but we have to contrast the kind of rigorous approach which the Government have to Clauses of this sort, and which successive Governments have had, with the extremely generous treatment which we give in some other aspects of our taxation system, for example, in the case of relief on life assurance and super-annuation contributions.
I am not concerned to argue the merits or demerits of any of those reliefs, but the fact is that we make very generous reliefs in respect of what for the taxpayer are often completely voluntary payments. For example, that applies to life assurance relief, for, outwith certain restrictive circumstances, the assurance premium is a completely voluntary payment. Yet we make a quite generous taxation concession when that kind of voluntary payment is made.
I am not arguing at the moment whether our taxation is right about this, or about superannuation, or a number of other matters, but we are extremely generous in many aspects of our taxation system and yet, when it comes to something like this, we adopt an extremely rigorous approach although the sums of money involved must be a good deal less than those involved in the other reliefs I have mentioned.
For all those reasons, there is no compelling ground for turning down the new Clauses. To some extent, I suppose, some of them are alternatives. They are not all completely independent and I would not expect that the Government would want to accept all of them. Last year we had what was really only a minor victory, but a welcome one, nevertheless, on the question of blind persons, and I hope that the Government might be persuaded to do

something about one or other at least of these new Clauses.
The claims of the Royal Commission have to be taken into account because it made a strong recommendation on this, but there are also, I think, the claims of simple humanity which I believe are even more compelling, and I hope that the Government may be convinced of the arguments and will accept at least one or other of the new Clauses.

4.30 p.m.

Mr. Geoffrey Hirst: We have a lot of work before us, and I shall, therefore, be brief. The reference which the hon. Member for Sowerby (Mr. Houghton) made to me encourages me to say something, but I think that it can be said with greater moderation and calmness on this occasion.
This is the type of new Clause with which I have been associated for some time. In fact, there have been few Clauses in Finance Bills over the years with which I have not been associated. The hon. Member for Sowerby, with his great expertise, put forward a strong argument for the acceptance of this proposal. He also produced almost as good a case as the Minister can against the new Clause, but I honestly thought that the arguments for it were just a little bit better than the arguments against it, and the hon. Gentleman, therefore, has my support on that point.
I know the difficulty of accepting a new Clause of this kind, but I think that there is a tremendous factor to be considered here. To use a phrase, this 100 per cent. disablement is not easily earned. It is a grave degree of disability. Someone whom I know well served with me during the war. He rendered magnificent service, and towards the end of the war lost an arm and a leg. He is now 100 per cent. disabled. He could not follow his former trade, but with great pluck and guts he has managed to rehabilitate himself and is doing quite a good job now.
I pay tribute to the Government for the excellent way in which they have raised the pension rates, and not least the pension to which this type of person is entitled. This friend of mine appreciates, as do all those who have been disabled, what has been done to help, but when people like this manage to get over their difficulties and earn extra money


I think that it would be a nice gesture if the Committee recognised their degree of disability by allowing them some relief such as has been suggested.
This cannot be a matter of £.s.d., because there are not many of these people. This is obviously a matter of principle, and I recognise the Government's difficulties, but there is also the willingness of the Committee to recognise that some things can be done and some cannot. I think that the Opposition have been a little ambitious in some of their Amendments, which if accepted would involve the spending of hundreds of millions of pounds, and which they could not really hope that the Chancellor would accept, but this is a small concession which the Government could accept.
I never allow a Finance Bill to go through without a rumpus unless we get a concession down the line, and it is about time that we got one. We have been sitting here for a long time with little return. This is an opportunity to link graciousness of heart to the willingness of the Committee and to make this concession for the 100 per cent. disabled. This degree of disablement is perhaps not quite as bad as total blindness, but it is, nevertheless, a grave disability. I think that a gesture of this kind can be worked into the principles by which we order our affairs, and I would be most grateful to the Government if they saw fit to accept the new Clause.

Mr. Percy Collick: I support what my hon. Friend the Member for Sowerby (Mr. Houghton), with his great knowledge and considerable skill, said in presenting this new Clause on behalf of disabled people. Year after year we have presented this case to the Committee with, I regret to say, little success, because the Government have been unresponsive, until last year, when we received the first concession. I agree with the hon. Member for Shipley (Mr. Hirst). It is time that we had some concession from the Government, and I can imagine no concession which is more warranted than those asked for in these new Clauses.
The new Clause in which I am especially interested is the one which suggests that in the case of 100 per cent. disabled persons the proposed relief should be granted. I know many people who would

benefit considerably if this concession were granted. Men disabled during the war, and by industrial injuries of one kind and another, by sheer determination have somehow managed to get back to some form of occupational interest from which they derive some income.
I have always understood it to be a principle of our Income Tax law that we should have regard not only to a person's income, but to his expenses in earning that income. These 100 per cent. disabled people who have managed to overcome their disabilities sufficiently to earn a livelihood, either in industry or one of the professions, are put to considerable expense in earning their money. In my constituency, many of them have to pay as much as 10s. a day to go from their homes to their place of work, and in London, where they have to pay taxi fares and other transport charges, the figure is very much higher.
Why cannot the Government accept the new Clause which proposes to make a 100 per cent. Income Tax allowance to these people to meet difficulties of the kind to which I have just referred? It is no good the Economic Secretary repeating the kind of things that we have had from the Treasury Bench in the past. It is no good anybody pointing out how difficult this will be to administer. The Royal Commission on the Taxation of Profits and Income went into this matter as thoroughly as anybody could. It had before it all the facts that it was possible to provide. It had the advice of all the experts, and also of professional people, and in paragraph 202 of its Report it said:
Our general conclusion is that grave disability ought to be the subject of allowance. It presents itself to us as a personal circumstance that sets apart those who suffer from it and directly affects their relative capacity to pay … What we are thinking of is a range of additional expense attendant upon the conduct of their normal life, not least upon the maintenance of their earning capacity, which yet goes unrelieved under the existing code.
I could quote further passages from the Report where these concessions were recommended.
Also in my constituency I have the other type of case for which relief is proposed. I am talking now of a wife who is totally disabled, perhaps through poliomyelitis, or through one of the other


distressing conditions which cause a woman to become bedridden, and where the man has to get domestic help to carry on the work of the household. Why should not our Income Tax law make provision and give allowances for that type of case?
As the hon. Member for Shipley rightly said, there is no question of much money being involved in this. We have only to remember that the Government gave £83 million a year in relief to the Surtax payers. If they can do that, the question of giving a trifling relief, because the total sum is trifling by any standard in these matters, would be so little that finance is not the argument.
I hope that I shall not anticipate what the Economic Secretary will say, but if he tries to tell us that this cannot be done for this, that, or some other administrative reason, he will have to make out a far better case than any of his predecessors have yet done, because I cannot for the life of me accept this sort of argument. Why cannot a man who is 100 per cent. disabled, but who is able somehow to get a living and has to incur extra expense, make that expense deductible against any of his earnings?
I can see no difficulty whatever in the Government doing that. I am certain that many of my hon. Friends on this side of the Committee, especially my legal hon. Friends, would gladly find words, if that is the problem, to overcome any question of drafting this Clause in such a way as would give the people who are wanting the benefit the real benefit which they deserve.
I do not want to prolong the argument, but I do say to the Economic Secretary, "Please do not trot out again today the things that have been said in the past from the Treasury Bench, because we are familiar with them". If there is a substantial argument against us, we are willing to listen, but I have gone into this with great care over the years and, frankly, I have heard of no argument which is acceptable to negate the moderate, reasonable proposals put forward in these new Clauses.
Last year, we did something for the blind people. As everyone will appreciate, it took us years to get the Government to accept it. For goodness' sake, let us, this year, do something. I say

to the Government, "Please do not trot out these old arguments, which we have heard so many times before, that the Government take the view that these disabilities should be dealt with by the social services".
In advance of any possibility of that argument being used, I say this to the Economic Secretary. Tell me of any single social service which could meet the problems that I have put before the Committee, either in the case of meeting the transport costs of the 100 per cent. disabled person, or the cost to a man whose wife is 100 per cent. disabled and who has to get domestic help to carry on his household? There is no social service that I know of which handles those two particular problems.
Those are the two major problems in disability cases which we are considering. I hope that the Economic Secretary will give us a positive answer on these matters.

The Economic Secretary to the Treasury (Mr. Edward du Cann): Our financial and economic debates are normally concerned with the greatest issues —employment, balance of payments, investments, exports, the relationship between indirect and direct taxation and the like. But I have always felt that many of the best speeches we listen to in the House of Commons are when the issues are human and personal.
I am sure that it would be the wish of all those who have been present in the Committee that I should pay tribute to the speeches that we have listened to. made with great sincerity—by the hon. Member for Birkenhead (Mr. Collick), especially—but all the speeches were good and clear. The hon. Member for Sowerby (Mr. Houghton) half apologised, I thought, for persistence. If he did, he had no reason to do so. because there can be no better subject for persistence, and no more worthy cause. If I may use his phrase, "We all want to help", and we cannot attempt anything better than that hon. Members should seek to improve the lot of their fellow men and women. That is, after all, what we are here for.
Cost was referred to by the hon. Member for Birkenhead, the hon. Member for Glasgow, Craigton (Mr. Milian) and my hon. Friend the Member for Shipley (Mr. Hirst)—in a most welcome intervention. We are always pleased to listen to my


hon. Friend and whether, as we were teased by the hon. Member for Sowerby, my hon. Friend gives "stick" to members of the Government Front Bench or not, his contributions are always worth hearing.
4.45 p.m.
It is not a question of cost. There are six new Clauses on the Notice Paper, a wide choice, as the hon. Gentleman said. I have had the costs totalled up and four of them cost nothing, or virtually nothing. They are new Clauses Nos. 14, 16, 18 and 67. The costs are only in connection with two of the proposed new Clauses, Nos. 15 and 17, which would cost respectively in this year and a full year £¾ million and £1 million in the case of new Clause No. 15 and £1 million and £1½ million in the case of new Clause No. 17. The total cost of them all—and I recognise the alternatives suggested by several hon. Members—would be £2 million only in 1963–64 and £2½, million to £3 million in a full year. These are small figures, as the hon. Member for Birkenhead says.
But the cost is not the point. There are certain general objections to doing things in this way. They vary in importance. I do not want any hon. Member of the Committee to think that these new Clauses are not acceptable to the Government for simple doctrinaire reasons; that is not the case. The test must be practicability.
Nor, as the hon. Member for Craighton suggested, is the question of the erosion of the tax basis so important in this regard, in my opinion. Some of my colleagues may not agree with me, but I do not regard it as being an argument and I am not proposing to use it as such. I should like to go through some of these points.
Some are more important than others. I think that it is obviously well worth while to give help to the disabled—we are all agreed about this—but it surely must be done in the way that benefits those who need help most. I believe that the Committee would agree about this. Tax relief, obviously, is not the most satisfactory method from this standpoint, since it can give no help to those whose incomes are so low that they pay no tax. That is one of the perennial difficulties which we discuss from time to time in this Committee. In other words, tax allowance is, in

effect, a highly selective method of giving help. It gives maximum help to those who perhaps need it least. But I would not attempt to suggest for one moment, whether a man has money or is earning money or whether he is not, that his need is not still extremely great.
There is, perhaps, an exception. It might be suggested—the hon. Member for Sowerby suggested it—that the door was a little opened because of the relief given to the blind last year. I shall come back to that in a moment.
I should like also to say a word about the expenses referred to by the hon. Member for Craighton, the hon. Member for Sowerby and the hon. Member for Birkenhead. The proposals which are being made are commended as a good way to take account of the extra expenses that disabled people have to incur. Certainly, they do have extra expenses; there is no doubt about that. The test proposed in the new Clauses Nos. 14, 15 and 67—I appreciate that it does not apply to new Clause No. 17 to the same extent—is the 100 per cent. disability, not the amount of the expense incurred. The plain fact must be that the amount of expenditure is not necessarily linked to the degree of disability. On the other hand, a man who may be 100 per cent. disabled from a pension point of view may have expenses which are less than those of a man who, for pension purposes, is 90 per cent. or 75 per cent. disabled.
The new Clause—"Relief for grave disability"—proposes to extend the tax relief to cases where disability is less than 100 per cent. That raises serious practical difficulties. The hon. Member for Sowerby suggested that we should be ready to face the consequences of looking after the 100 per cent. disabled, and I think that we are. But it is very difficult to deal with the kind of anxiety and argument that one would be faced with if we established degrees of disability. It is extraordinarily hard in human terms to draw the line exactly between one degree of disability and another. The hon. Member for Sowerby and the hon. Member for Craigton referred particularly to the question of complexity. Incidentally, the hon. Member for Sowerby said that marriage was a simple matter. I find myself in some disagreement with him about that.

Mr. Houghton: I did not say that marriage was a simple matter. I said that in questions of tax relief we stuck to the simple things of life, and that is quite different. In terms of Income Tax relief, marriage, housekeepers and dependants are simple things. Disability is more complicated.

Mr. du Cann: I see. It may be that marriage is a simple matter in terms of taxation. But I am sure that it is not a simple smatter in other terms—I half understood the hon. Gentleman.
Regarding complexity I would call attention particularly to subsection (1, b) in the new Clause—"One hundred per cent. disabled; Relief for grave disability";—and "One hundred per cent. disability and constant attendance: extension of housekeeping allowance". I do not doubt for a moment that these new Clauses have been drafted to recognise that there are many disabled who do not qualify for one reason or another for a pension. That, incidentally, is a point which is not taken into account in the new Clause—"One hundred per cent. disablement pensions: relief". Perhaps that is one of the objections to that new Clause. There would be formidable problems of medical assessment in relation to practicability, particularly if there were some relief for disability less than 100 per cent. A formidable administrative apparatus would have to be set up in order to deal with the matter. I will not go into that in further detail. But it is a matter of fact.
I do not believe that practical difficulties are necessarily insuperable; I never have. But in this case they are certainly extraordinarily formidable and they must be taken into consideration. They cannot be gainsaid or ignored, and certainly they cannot be overruled. The position is that if Parliament, in its wisdom, saw fit to pass these new Clauses—"One hundred per cent. disabled; Relief for grave disability"; and "One hundred per cent. disability and constant attendance: extension of housekeeper allowance"—the Clauses could not be implemented during this administrative year. That is a matter of fact which perhaps illustrates how great is the problem.
If that criticism were answered by deleting, let us say, subsection (1, b) of the new Clauses, and relief given only

to those whoses cases are readily identifiable, as in new Clause—"One hundred per cent. disablement pension: relief"—I am bound to point out that this, in my opinion, would be unfair on all the other classes of disabled persons not in receipt of a 100 per cent. disability pension of one sort or another. I referred earlier to the difficulty of definition. This also applies to new Clause—"Relief for disabled persons". This is a Clause dealing with the question of men or women prevented by bodily infirmity or mental infirmity from exercising their normal trade, profession, employment or vocation. On the surface it seems an attractive suggestion. In practical terms, however, there are certain difficulties relating to it.
What about a miner or a steel worker who is injured at work but who could do a full-time sedentary job? Would he qualify? Should he qualify? He would be unable to carry on his normal occupation. But he could carry on another full-time occupation, perhaps. What about a person incapacitated from childhood? He would not qualify am not sure that that would necessarily be fair. That again is a practical problem which faces us in attempting to decide on some of these matters.
I should like to say a word about the views of the Royal Commission. The hon. Member for Birkenhead and the hon. Member for Sowerby both quoted from paragraph 202 of the Second Report. I repeat its conclusion that grave disability should be the subject of an allowance. We had some discussion last night about the recommendations of the Royal Commission, and whether they should be regarded as Holy Writ. We agreed in general, I think, that one must give due regard to the Report of any Royal Commission. But although the Commission was as clear as was suggested by hon. Gentlemen opposite, it carefully laid down certain conditions under which allowances should be granted. One was that an allowance should not be given in addition to tax-free disability benefits. Another was that the £40 or the £75 allowance—the Committee will know to what I am referring—should be withdrawn. The new Clause—"One hundred per cent. disabled"—bears on this, although it reproduces selected parts of the main recommendation of the Radcliffe Commission.
I must point out that, besides the general objections to which I have already referred, it omits the other features of the Commission's comprehensive scheme. So in fact one cannot plead the Royal Commission Report in its favour, for it does not fully implement what the Royal Commission recommended.
On the other hand, there is the alternative in the new Clause—"one hundred per cent. disablement pensions relief."—which is a variant of the first Clause. This takes into account the proposal of the Royal Commission which recommended that 100 per cent. disability relief should be withheld while a taxpayer was receiving tax-free benefits related to the degree of his disability. That meets some of the objection in the other Clause. But I must point out that it does not meet objections which I have already raised.
The degree of disablement recognised for medical assessment is not necessarily a guide to the expenditure in particular cases. Nor does it meet the other point that persons subject to 90 per cent. disability would think themselves just as much entitled to some relief as persons placed in the medical category of 100 per cent. disability. Certainly these difficulties would apply with undiminished force if we implemented the new Clause—" One hundred per cent. disablement pensions: relief ". And that is not all. because the Clause would almost certainly be nugatory. With the limitation envisaged by the Radcliffe Commission, war disabled and those receiving industrial injury pensions would not qualify for any tax relief, since the existing tax-free benefits are much more valuable to them than the tax allowances. The Committee will know that these tax-free benefits are being increased with effect from the beginning of this week, 27th May, and that point is especially valid.
I was proposing, had the hon. Lady the Member for Blackburn (Mrs. Castle) been in the Chamber, to say a good deal more about the new Clause in her name. But I will not do so now. The hon. Member for Sowerby referred particularly to that Clause, and to him I would suggest that the remarks of the Royal Commission in relation to these allowances are particularly relevant.
I said that I would say a word about the blind, which as the hon. Member for

Sowerby properly suggested, is a narrow issue. The hon. Member for Craigton and the hon. Member for Birkenhead referred particularly to what was done last year, and, in my opinion, done quite rightly. My right hon. Friend the Home Secretary, who was then Chief Secretary, when introducing this matter said:
The objections to the idea of a general tax relief for the disabled remain as valid as ever."—[OFFICIAL REPORT, 2nd July, 1962; Vol. 662, c. 230.]
I think that is true. But the recommendations of the Committee of this House translated now into law in the new Section to last year's Finance Act fitted the Royal Commission's recommendation exactly, in that the whole allowance is given only if, first, the blind person is not receiving tax-free disability payments or augmentation allowances and secondly, the £40 daughter allowance is not drawn on at the same time.
5.0 p.m.
There is the added point, as the hon. Member for Sowerby agreed, that these people are a clearly definable class, because they are already registered as blind persons. The Committee may think that there is perhaps a special precedent for this action, in that the National Assistance Board has a special scale for blind people. In any case, Parliament has already recognised blind people as being a special and peculiar category. I think that they are very different from the categories we are discussing today. There was and is, in the House of Commons and in the country, a special and unique sympathy for the blind. So there should be, in my opinion, and especially for those who, as my right hon. Friend the then Chief Secretary said last year, "continue to attempt to earn their own livings and to hold their heads up proudly in society in spite of their disability".
There can be none of the objections in this concession, if that is the right term to use, which would arise if we were to implement any of these new Clauses in respect of 100 per cent. disability or less. There are no lines to be drawn between who is a blind person and who is not. Again, as the hon. Member for Sowerby said, these people are a clearly definable class.

Mr. Houghton: Will the Economic Secretary say how many claims have been


made under the provision incorporated in last year's Finance Act? Has he any record of the extent of the new relief?

Mr. du Cann: No, Sir. I do not know that offhand, but I will try to discover it and let the hon. Gentleman know before I sit down, If I cannot, I will write to him and see that he has the information promptly.
I turn to the question raised about the Government's whole policy in relation to assisting those who are disabled to a greater or lesser extent. The hon. Member for Sowerby referred to this, as did the hon. Member for Birkenhead. It is correct to say that, in the Government's view the right way to help is not through the fiscal system, because we feel this could well create anomalies, unfairness and inequities, as I hope I have illustrated to the Committee. We feel that the right way to help is through the direct social service benefits and pensions. I do not say only through the Welfare State. I mean in every way. We believe that in this sense we can do most for those who stand in the greatest need.
The hon. Member for Birkenhead discussed a little some of the services which are already provided. He said that there were no facilities for domestic help, no facilities for motor cars, and so on. I think that in his kindly anxiety to be brief, in the interests of the Committee as a whole and the great volume of business that we have to get through today, he perhaps foreshortened his argument. I do not believe that he intended to mislead the House. What he said in fact does not quite represent the facts, as I think he knows better than I do, for he has so much experience in these matters. I will not retail the great list of social effort that the Government make, with the agreement of the whole House of Commons, to help these people—the work done through the local authorities, and so on. Certainly it is formidable. Certainly it includes domestic help. Certainly it includes cars, tricycles, and the rest of it.

Mr. Collick: I think the Economic Secretary should be clear about this because, whilst it is true that a local authority can organise domestic help in the case I quoted, where the housewife was struck down with polio, the expense falls on the man. It is not provided by

the State or by the local authority. As to the case 1 instanced about transport, I know of no Government service or welfare service that makes provision of that kind.

Mr. du Cann: If the hon. Gentleman is talking on a rather narrow point of a disabled wife, I must agree with him. On the other hand, if he is saying, for example, that disabled people cannot get domestic help or assistance with transport, I would disagree with him. I appreciate that he is not saying that. I understand his first point. There is a peculiar difficulty over this question of wives. The argument is almost exactly parallel to the difficult case of the special allowance for a daughter's services.
Once one begins to take a view that it is appropriate to deal with an especial situation, one has a wide generality of situations to deal with. Therefore, it must be appropriate to endeavour to bring aid especially to those cases of greatest need. That is what the social services endeavour to do.
I will try to deal a little more fully with this point in a few moments. Before I do so, perhaps I can tell the hon. Member for Sowerby, who asked me the question as to the extent of the relief, that I am sorry that the information is not available, at any rate not at this moment. If it becomes available, I will get it for him.
I want to say a few words on the question of money—these tax-free benefits to which the Royal Commission referred and which play so large a part in any calculation. I have had certain calculations made to establish exactly what it is that people can draw at present. These are the new rates should they be severely disabled. I take first the case of an ex-Service man. Perhaps this has some bearing on what my hon. Friend the Member for Shipley said. I will take an ex-private at the bottom of the scale; under 65; married, with one child; receiving constant attendance allowance. With his 100 per cent. pension, the allowance for his wife and his child, the constant attendance allowance and the comforts allowance, he could be drawing a tax-free pension of £9 12s. 6d. a week. He could in some cases—not in all—be working as well.
I will take a worse case—again an ex-private; under 65; married with two children; on full supplementation. I will not list the details, unless the Committee wishes. The total of his tax-free allowance could be £19 7s. 3d. a week. In addition, he could draw the Family Allowance.
I will now take a disablement pensioner under the Industrial Injuries Scheme, assessed at 100 per cent.; incapable of work and needing constant attendance; a married man, with no children. His pension with all the other items gives him a total allowance of £13 14s. a week, tax-free. I will now take a man in similar circumstances, except that he has two children. His total tax-free allowance is £15 6s. a week. If the constant attendance allowance, which in the two last examples I have taken at £2 10s., was increased to £5 a week, as it could be in cases of exceptionally severe disablement, the figures respectively would rise to £16 4s. and £17 16s. a week.
One could perhaps make a great thing of these figures. I want to make particular reference to the point that the Committee would be misleading itself very badly if it supposed that nothing was being done. I do not wish to make a great thing of the figures, and it is not my intention to do so.
I conclude as I began. I certainly do not seek to convince the Committee in any way that more does not need to be done for those of our fellows who are disabled or otherwise incapacitated. I am perfectly clear, and so are the Government, that more should be done and will be done progressively. That is Government policy.
My hon. Friend the Member for Shipley and the hon. Members for Sowerby and Birkenhead said this in effect. They said that they did not believe that there is one of us who does not in his daily journeys stop to reflect, whether it is in relation to the shop floor or in relation to the battlefield, to which my hon. Friend the Member for Shipley referred, when one comes across a case of disability—"There but for the grace of God go I". That makes us all specially cognisant of our very great responsibilities and each and every one of us in the House of Commons has a particular responsibility, for people

look to us to remember them particularly.
I repeat that things are being done and will continue to be done, as I hope I have illustrated, by any Government—by this Government or by their successors. What is essential is that the methods we choose to give help should be right. With the aims of all those who have spoken and argued for these new Clauses I most wholeheartedly agree, but I cannot agree that the methods poposed are the right methods, for the reasons that I have given, I hope clearly and I hope understandably, to the Committee.

Mr. Houghton: The Economic Secretary is a most difficult person to quarrel with. He agrees with everything one says, except one's proposal. What can one do with a man like that? He is with us the whole time. Of course, he agrees; his sympathy is even greater than ours, and we move along in a spirit of amity and accord, but in his final sentence he says, "I cannot agree with the method that you propose to adopt to deal with this problem."
First, I want to dismiss summarily the argument which the hon. Gentleman used that to give concessions through the instrument of taxation is highly selective and not necessarily the best way of doing a thing because it does not help those who do not pay tax. Well, well, well! Of course we cannot help people who do not pay Surtax by reducing Surtax. We cannot help people who do not pay Income Tax by increasing the personal allowances. The Chancellor would be turned into a pillar of salt if he could not make a move without helping those people who do not pay tax.
Our proposal is to give a relief of taxation. That is what we are talking about. We are not trying to embrace all the social services. We are not bringing in the National Assistance Board, the local welfare services and the war disability and industrial injuries schemes. We are dealing with the narrow impact of taxation on the people whose mode of life is severely affected by their disablement. So for goodness' sake let us dismiss that. Please do not let us hear it again.
The hon. Gentleman suggested that it is not a matter of money and not a matter of fiscal policy. It is really a


question of administration. The arguments that the hon. Gentleman was using about the social services, about what people can draw, what is to be done and what more is promised, were just as relevant in connection with blind persons as they are in connection with people who are gravely disabled in other respects. So that the problem of administration is the crucial one, in my judgment, of the hon. Gentleman's argument. The blind, he said, were clearly identifiable. I conceded that in my speech.
The 100 per cent. disabled under the war and industrial injuries schemes are clearly identified. There is no doubt about that, and if their tax relief is to be quali5ed by payments which they are receiving tax free under the disablement schemes as in the case of the blind, so may it be. Some would qualify who are so identifiable, but the real problem is those who would be equally disabled and who are not identifiable under either of these schemes and to whom no payment under present circumstances is given. They are the people who would qualify most.
Paragraph 203 of the Report of the Royal Commission on the Taxation of Profits and Income said:
We do not underestimate the difficulty that would face the Inland Revenue department in creating the necessary administration to deal with a problem of medical assessment. The difficulty reinforces the need to begin cautiously and to confine qualification to 100 per cent. disablement.
That is where the Royal Commission thought that we ought to start, and, for the moment, stop. But it went on to say:
But we feel at the same time that the difficulty is not insuperable and ought to be faced.
That is what the Royal Commission said. I agree that the Royal Commission's word is not Holy Writ, but it was as conscious as any outside body of the problems of administration in the Inland Revenue. It knew what it was talking about on that matter, and it said that it ought to be faced.
5.15 p.m.
The Economic Secretary knows full well that in the field of assessment of taxable profits, of dealing with claims for expenses under Schedule E, of

deciding the difference between capital and revenue expenditure on many matters in the complex field of industrial taxation, the circumstances of individual cases have to be looked at very carefully and critically by the Inland Revenue and that it has a large measure of discretion in its hands. It is able to apply taxation by consent and to reach agreement with a taxpayer on how his case should be dealt with under the law.
Why should this not be so in the field of personal allowances? Why should every single case be clearly identifiable, easily verifiable and nothing left to discretion at all? I do not see why there should be a wide field of discrimination in the matter of large taxation and a meticulous application of rules and regulations in the matter of small personal taxation where it matters a great deal more to the individuals concerned. This can be done. I said before that the Inland Revenue can perform miracles, and it can do this.
One thing for which I envy the Economic Secretary and his hon. Friend at his side is their power of influence over the Inland Revenue. If I ever get into that position—

Mr. J. J. Mendelson: My hon. Friend will.

Mr. Houghton: I am just expressing a personal envy and neither staking claims nor defining my ambitions.
What I am saying is that it is an enviable position to be in, to bring about these reforms and to subordinate administration difficulties to human good. I am conscious of the administration difficulties. I lived with them in the Inland Revenue for thirty years. When people made representations to me I listened with lesser or greater patience all that time. But here is a field in which administration could overcome the difficulties in granting concessions.
I believe that this is the only issue between the hon. Gentleman and my hon. Friends and myself at present. The principle is no longer tenable. The case for it on merit cannot be disputed. We have had moving speeches by some of my hon. Friends and by some hon. Members opposite, but administration is the problem here. I am sorry that


in the circumstances I must ask my hon. Friends to register some disapproval of the hon. Gentleman's reply. But we shall keep at it because we believe that in this field, as in others, insistence will eventually persuade the Government

that there is merit in our case. We shall go on until we triumph.

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 118. Noes 170.

Division No. 132.]
AYES
[5.18 p.m.


Allaun, Frank (Salford, E.)
Hart, Mrs. Judith
Oram, A. E.


Allen, Scholefield (Crewe)
Hayman, F. H
Pannell, Charles (Leeds, W.)


Barnett, Guy
Healey, Denis
Pargiter, G. A.


Benson, Sir George
Henderson, Rt.Hn.Arthur(Rwly Ragis)
Pavitt, Laurence


Blackburn, F.
Herblson, Miss Margaret
Peart, Frederick


Bowden, Rt. Hn. H. W. (Leics,S. W.)
Hirst, Geoffrey
Prentice, R. E.


Boyden, James
Holman, Percy
Price, J. T. (Westhoughton)


Braddock, Mrs. E. M.
Houghton, Douglas
Randall, Harry


Bradley, Tom
Hoy, James H.
Redhead, E. C.


Butler, Herbert (Hackney, C.)
Hunter, A. E.
Reid, William


Butler, Mrs. Joyce (Wood Green)
Hynd, John (Attercliffe)
Reynolds, G. W.


Callaghan, James
Irvine, A. J. (Edge Hill)
Roberts, Albert (Normanton)


Carmichael, Neil
Irving, Sydney (Dartford)
Robinson, Kenneth (St. Pancras, N.)


Chapmen, Donald
Janner, Sir Barnett
Ross, William


Collick, Percy
Jeger, George
Shinwell, Rt. Hon. E.


Corbet, Mrs. Freda
Jenkins, Roy (Stechford)
Short, Edward


Cronin, John
Jones,Rt.Hn.A. Creech (Wakefield)
Silverman, Julius (Aston)


Crosland, Anthony
Jones, Dan (Burnley)
Silverman, Sydney (Nelson)


Cullen, Mrs. Alice
Kenyon, Clifford
Small, William


Darling, George
Key, Rt. Hon. C. W.
Sorensen, R. W.


Davies, Harold (Leek)
Lee, Frederick (Newton)
Steele, Thomas


Davies, S. O. (Merthyr)
Lee, Miss Jennie (Cannock)
Stewart, Michael (Fulham)


Dempsey, James
Lewis, Arthur (West Ham, N.)
Stross, Dr. Barnett (Stoke-on-Trent, C.)


Diamond, John
Lubbock, Eric
Swingler, Stephen


Donnelly, Desmond
Mabon, Dr. J. Dickson
Taverne, D.


Driberg, Tom
McBride, N.
Thomson, G. M. (Dundee, E.)


Edwards, Robert (Bilston)
McCann, John
Tomney, Frank


Edwards, Walter (Stepney)
MacColl, James
Warbey, William


Fitch, Alan
MacDermont, Niall
Whitlock, William


Foot, Dingle (Ipswich)
McLeavy, Frank
Willey, Frederick


Fraser, Thomas (Hamilton)
MacPherson, Malcolm (Stirling)
Williams, W. T. (Warrington)


Galpern, Sir Myer
Mallaileu, J. P. W. (Huddersfield, E.)
Willis, E. G. (Edinburgh, E.)


Ginsburg, David
Marsh, Richard
Wilson, Rt. Hon. Harold (Huyton)


Gourlay, Harry
Mayhew, Christopher
Woof, Robert


Greenwood, Anthony
Mellish, R. J.
Wyatt, Woodrow


Grey, Charles
Mendelson, J. J.
Yates, Victor (Ladywood)


Griffiths, Rt. Hon. James (Lianelly)
Millan, Bruce



Gunter, Ray
Mitchison, G. R.
TELLERS FOR THE AYES:


Hale, Leslie (Oldham, W.)
Moyle, Arthur
Mr. G. H. R Rogers and


Hamilton, William (West Fife)
Mulley, Frederick
Mr. Lawson


Hannan, William
Noel-Baker, Francis (Swindon)





NOES


Agnew, Sir Peter
Camapbell, Gordon (Moray &amp; Nairn)
Fletcher-Cooke, Charles


Aitken, W. T.
Carr. Compton (Barons Court)
Freeth, Denzil


Allason, James
Cary, Sir Robert
Gammans, Lady


Arbuthnot, John
Chataway, Christopher
Gibson-Watt, David


Ashton, Sir Hubert
Chichester-Clark, R.
Gilmour, Ian (Norfolk, Central)


Atkins, Humphrey
Clark, Henry (Antrim, N.)
Glover, Sir Douglas


Awdry, Daniel (Chippenham)
Clark, William (Nottingham, S.)
Glyn, Sir Richard (Dorset, N.)


Barber, Anthony
Cole, Norman
Goodhew, Victor


Barlow, Sir John
Cooper-Key, Sir Neill
Gresham Cooke, R.


Batsford, Brian
Cordeaux, Lt.-Col. J. K.
Gurden Harold


Baxter, Sir Beverley (Southgate)
Corfield, F. V.
Hall, John (Wycombe)


Bell, Ronald
Costain, A. P.
Hamilton, Michael (Welfingborough)


Berkeley, Humphry
Craddock, Sir Beresford (Spelthorne)
Harris, Frederic (Croydon, N. W)


Biffen, John
Critchley, Julian
Harris, Reader (Heston)


Biggs-Davison, John
Cunningham, Knox
Harrison, Brian (Maldon)


Bingham, R. M.
Curran, Charles
Harrison, Col. Sir Harwood (Eye)


Bishop, F. P.
Digby, Simon Wingfield
Hastings, Stephen


Black, Sir Cyril
Donaldson, Cmdr, C. E. M.
Henderson, John (Cathcart)


Bossom, Hon. Clive
du Cann, Edward
Hendry, Forbes


Bourne-Arton, A.
Duncan, Sir James
Hill, Dr. Rt. Hon. Charles (Luton)


Boyd-Carpenter, Rt. Hon. John
Elliot, Capt, Walter (Carshalton)
Hill, Mrs. Eveline (Wythenshawe)


Brooman-White, R.
Emery, Peter
Hill, J. E. B. (S. Norfolk)


Brown, Alan (Tottenham)
Emmet, Hon. Mrs. Evelyn
Hocking, Philip N.


Browne, Percy (Torrington)
Errington, Sir Eric
Holland, Philip


Buck, Antony
Farr. John
Hope, Rt. Hon. Lord John


Bullus, Wing Commander Eric
Fell, Anthony
Hornby, R. P


Burden, F. A.
Finlay, Graeme
Hornsby-Smith, Rt. Hon. Dame P.




Howard, Hon. G. R. (St. Ives)
Maxwell-Hyslop, R. J.
Sharples, Richard


Hughes, Hallett, Vice-Admiral John
Mills, Stratton
Shepherd, William


Hughes-Young, Michael
Miscampbell, Norman
Skeet, T. H. H.


Hutchison, Michael Clark
Montgomery, Fergus
Smithers, Peter


Iremonger, T. L.
More, Jasper (Ludlow)
Smyth, Rt. Hon. Brig. Sir John


James, David
Morgan, William
Stanley, Hon. Richard


Johnson, Dr. Donald (Carlisle)
Neave, Airey
Stevens, Geoffrey


Johnson Smith, Geoffrey
Nugent, Rt. Hon. Sir Richard
Stodart, J. A.


Kerr, Sir Hamilton
Osborn, John (Hallam)
Summers, Sir Spencer


Kershaw, Anthony
Page, Graham (Crosby)
Tapsell, Peter.


Kimball, Marcus
Pannell, Normanl (Kirkdale)
Taylor, Frank (M'ch'st'r, Moss Side)


Lancaster, Col. C. G.
Pearson, Frank (Clitheroe)
Temple, John M.


Leather, Sir Edwin
Peel, John
Thomas, Peter (Conway)


Legge-Bourke, Sir Harry
Pickthorn, Sir Kenneth
Thompson, Sir Richard (Croydon, S.)


Lewis, Kenneth (Rutland)
Pike, Miss Mervyn
Touche, Rt. Hon. Sir Gordon


Lilley, F. J. P.
Pitman, Sir James
Turner, Colin


Linstead, Sir Hugh
Powell, Rt Hon. J. Enoch
Turton, Rt. Hon. R. H.


Litchfield, Capt. John
Price, David (Eastleigh)
Vaughan-Morgan, Rt. Hon. Sir John


Longden, Gilbert
prior-Palmer, Brig, Sir Otho
Walder, David


McAdden, Sir Stephen
Profumo, Rt. Hon. John
Walker, Peter


MacArthur, Ian
Quennell, Miss J. M.
Webster, David


McLaren, Martin
Rawlinson, Sir Peter
Williams, Dudley (Exeter)


Macleod, Rt. Hn. Lain (Enfield, W.)
Redmayne, Rt Hon. Martin
Wills, Sir Gerald (Bridgwater)


Macpherson, Rt. Hn. Niall (Dumfries)
Rees, Hugh
Wilson, Geoffrey (Truro)


Maddan, Martin
Renton, Rt. Hon. David
Wise, A. R.


Maitland, Sir John
Ridley, Hon. Nicholas
Wolrige-Gordon, Patrick


Markham, Major Sir Frank
Ridsdale, Julian
Woollam, John


Marshall, Douglas
Robertson, Sir D. (C'thn's &amp; S'th'ld)



Mathew, Robert (Honiton)
Russell, Ronald
TELLERS FOR THE NOES:


Maudling, Rt Hon. Reginald
St. Clair, M.
Mr. Ian Fraser and Mr. Pym


Mawby, Ray
Scott-Hopkins, James

The Temporary Chairman (Mr. W. R. Williams): I wonder if the hon. Member for Sowerby (Mr. Houghton) will assist me by indicating whether he and his hon. Friends wish to devide on any of the other new Clauses in this group and, if so, which?

Mr. Houghton:: Yes, Mr. Williams; on new Clause No. 18.

New Clause.—(EXTENSION OF RELIEF UNDER FINANCE ACT 1960, S. 17.)

(1) A married man who is entitled for the year of assessment to the higher (married persons) relief under section 210(1) of the Income Tax Act 1952, but those wife was throughout that year totally incapacitated by

physical or mental infirmity, shall be entitled to relief under and subject to the conditions of section 17 (additional relief for widows and others in respect of children) of the Finance Act 1960, except that he shall no longer be required to prove any of the matters set out in subsection (2) of that last-mentioned section (being matters relating to a child resident with him).

(2) This section shall not be deemed to have required any change in the amounts deducted or repaid under section 157 (pay as you earn) of the Income Tax Act 1952. before 6th July 1963.—[Mr. Houghton.]

Brought up, and read the First time.

Motion made, and Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 119, Noes 171.

Division No. 133.]
AYES
[5.28 p. m.


Allaun, Frank (Salford, E.)
Donnelly, Desmond
Hoy, James H.


Allen, Scholefield (Crewe)
Driberg, Tom
Hunter, A. E.


Barnett, Guy
Edwards, Robert (Bilston)
Hynd, John (Attercliffe)


Benson, Sir George
Edwards, Walter (Stepney)
Irvine, A. J. (Edge Hill)


Blackburn, F.
Fitch, Alan
Irving, Sydney (Dartford)


Bowden, Rt. Hn. H. W. (Leics, S.W.)
Foot, Dingle (Ipswich)
Janner, Sir Barnett


Boyden, James
Fraser, Thomas (Hamilton)
Jeger, George


Braddock, Mrs. E. M.
Galpern, Sir Myer
Jenkins, Roy (Stechford)


Bradley, Tom
Ginsburg, David
Jones, Rt. Hn. A.Creech (Wakefield)


Butler, Herbert (Hackney, C.)
Gourlay, Harry
Jones, Dan (Burnley)


Butler, Mrs. Joyce (Wood Green)
Greenwood, Anthony
Kenyon, Clifford


Callaghan, James
Grey, Charles
Key, Rt. Hon. C. W.


Carmichael, Neil
Griffiths, Rt. Hon. James (Lianelly)
Lee, Frederick (Newton)


Chapman, Donald
Gunter, Ray
Lee, Miss Jennie (Cannock)


Collick, Percy
Hale, Leslie (Oldham, W.)
Lewis, Arthur (West Ham, N.)


Corbet, Mrs. Freda
Hamilton, William (West Fife)
Lubbock, Eric


Cronin, John
Hannan, William
Mabon, Dr. J. Dickson


Crosland, Anthony
Hart, Mrs. Judith
McBride, N.


Cullen, Mrs. Alice
Hayman, F. H.
McCann, John


Darling, George
Healey, Denis
MacColl, James


Davies, Harold (Leek)
Henderson, Rt.Hn. Arthur(RwlyRegis)
MacDermot, Niall


Davies, S. O. (Merthyr)
Herbison, Miss Margaret
McInnes, James


Dempsey, James
Holman, Percy
McLeavy, Frank


Diamond, John
Houghton, Douglas
MacPherson, Malcolm (Stirling)




Mallalieu, J.P.W.(Huddersfield, E.)
Randall, Harry
Swingler, Stephen


Marsh, Richard
Redhead, E. C.
Taverne, D.


Mayhew, Christopher
Reid, William
Thomson, G. M. (Dundee,
E.)


Mellish, R. J.
Reynolds, G. W.
Tomney, Frank


Mendelson, J. J.
Roberts, Albert (Normanton)
Warbey, William


Milian, Bruce
Robinson, Kenneth (St. Pancras, N.)
 Whitlock, William


Mitchlson, G. R.
Rose, William
Willey, Frederick


Moyle, Arthur
Shinwell, Rt. Hon. E.
Williams W. T. (Warrington)


Mulley, Frederick
Short, Edward
Willis, E. G. (Edinburgh, E.)


Noel-Baker, Francis (Swindon)
Silverman, Julius (Aston)
Wilson, Rt. Hon. Harold (Huyton)


Oram, A. E.
Silverman, Sydney (Nelson)
Woof, Robert


Pannell, Charles (Leeds, W.)
Skeffington, Arthur
Wyatt, Woodrow


Pargiter, G. A.
Small, William
Yates, Victor (Ladywood)


Pavitt, Laurence
Sorensen, R. W.



Peart, Frederick
Steele, Thomas
TELLERS FOR THE AYES:


Prentice, R. E.
Stewart, Michael (Fulham)
Mr. G. H. R. Rogers and


Price, J.T.(Weethughton)
Stross,Dr,Barnett(Stoke-on-Trent,C.)
Mr. Lawson,




NOES


Agnew, Sir Peter
Gilmour, Ian (Norfolk, Central)
Morgan, William


Aitken, W. T.
Glover, Sir Douglas
Neave, Airey


Allason, James
Glyn, Sir Richard (Dorset, N.)
Nugent, Rt. Hon. Sir Richard


Arbuthnot, John
Goodhew, Victor
Osborn, John (Hallam)


Ashton, Sir Hubert
Gresham Cooke, R.
Page, Graham (Crosby)


Atkins, Humphrey
Gurden, Harold
Pannell, Norman (Klrkdale)


Awdry, Daniel (Chippenham)
Hall, John (Wycombe)
Peel, John


Barber, Anthony
Hamilton, Michael (Wellingborough)
 Percival, Ian


Barlow, Sir John
Harris, Frederic (Croydon, N.W.)
Pickthorn, Sir Kenneth


Batsford, Brian
Harris, Reader (Heston)
Pike, Miss Mervyn


Baxter, Sir Beverley (Southgate)
Harrison, Brian (Maldon)
Pitman, Sir James


Bell, Ronald
Harrison, Col. Sir Harwood (Eye)
Powell, Rt. Hon. J. Enoch


Berkeley, Humphry
Hastings, Stephen
Price, David (Eastleigh)


Biffen, John
Henderson, John (Cathcart)
Prior-Palmer, Brig. Sir Othe


Biggs-Davison, John
Hendry, Forbes
Profumo, Rt. Hon. John


Bingham, R. M.
Hill, Dr. Rt. Hon. Charles (Luton)
Pym, Francis


Bishop, F. P.
Hill, Mrs. Eveline (Wythenshawe)
Quennell, Miss J. M.


Black, Sir Cyril
Hill, J. E. B. (S. Norfolk)
Rawlinson, Sir Peter


Bossom, Hon. Clive
Hirst, Geoffrey
Redmayne, Rt. Hon. Martin


Bourne-Arton, A.
Hocking, Philip N.
Rees, Hugh


Boyd-Carpenter, Rt. Hon. John
Holland, Philip
Renton, Rt. Hon. David


Brooman-White, R.
Hope, Rt. Hon. Lord John
Ridley, Hon. Nicholas


Brown, Alan (Tottenham)
Hornsby-Smith, Rt. Hon. Dame P.
Ridsdale, Julian


Browne, Percy (Torrington)
Howard, Hon. G. R. (St. Ives)
Robertson, Sir D. (C'thn's &amp; S'th'ld)


Buck, Antony
Hughes Hallett, Vice-Admiral John
Russell, Ronald


Bullus, Wing Commander Eric
Hughes-Young, Michael
St. Clair, M.


Burden, F. A.
Hutchison, Michael Clark
Scott-Hopkins, James


Campbell, Gordon (Moray &amp; Nairn)
Iremonger, T. L.
Sharples, Richard


Carr, Compton (Barons Court)
James, David
Shepherd, William


Cary, Sir Robert
Johnson, Dr. Donald (Carlisle)
Skeet,T.H.H.


Chataway, Christopher
Johnson Smith, Geoffrey
Smithers, Peter


Chichester-Clark,R.
Kerr, Sir Hamilton
smyth, Rt. Hon. Brig. Sir John


Clark, Henry (Antrim, N.)
Kershaw, Anthony
Stevene Geoffrey


Clark, William (Nottingham, S.)
Kimball, Marcus
Stodart, J.A.


Cole, Norman
Lancaster, Col. C. G.
Summers, Sir Spencer


Cooper-Key, Sir Neill
Leather, Sir Edwin
Tapsell, Peter


Cordeaux, Lt.-Col. J. K.
Legge-Bourke, Sir Harry
Taylor, Frank (M'ch'st'r, Moss Side)


Corfield, F.V.
Lewis, Kenneth (Rutland)
Temple, John M.


Costain, A. P.
Lilley, F. J. P.
Thomas, Peter (Conway) 


Craddock, Sir Beresford (Spelthorne)
Linstead, Sir Hugh
Thompson, Sir Richard (Croydon,S.)


Critchley, Julian
Litchfield, Capt. John
Touche, Rt. Hon. Sir Gordon


Cunningham, Knox




Curran, Charles
Longden, Gilbert
Turner, Colin


Digby, Simon Wingfield
McAdden, Sir Stephen
Turton, Rt. Hon. R. H.


Donaldson, Cmdr. C. E. M.
MacArthur, Ian
Vaughan-Morgan, Rt. Hon. Sir John


du Cann, Edward
Macleod, Rt. Hn. lain (Enfield. W.)
Vosper, Rt. Hon. Dennis


Duncan, Sir James
Macpherson,Rt.Hn.Niall(Dumtries)
Walder, David


Elliot, Capt. Walter (Carshalton)
Madden, Martin
Walker, Peter


Emery, Peter
Maitland, Sir John
Webster, David


Emmet, Hon. Mrs. Evelyn
Markham, Major Sir Frank
Williams, Dudley (Exeter)


Errington, Sir Eric
Marshall, Douglas
Wills, Sir Gerald (Bridgwater)


Farr, John
Mathew, Robert (Honiton)
Wilson, Geoffrey (Truro)


Fell, Anthony
Maudling, Rt. Hon. Reginald
Wise, A. R.


Finlay, Graeme
Mawby, Ray
Wolrige-Gordon, Patrick


Fletcher-Cooke, Charles
Maxwell-Hyslop, R. J.
Woollam, John


Fraser, Ian (Plymouth, Sutton)
Mills, Stratton



Freeth, Denzil
Miscampbell, Norman
TELLERS FOR THE NOES:


Gammans, Lady
Montgomery, Fergus
Mr. Frank Pearson and


Gibson-Watt, David
More, Jasper (Ludlow)
Mr. McLaren.

New Clause.—(INCOME TAX, SCHEDULE E: DEDUCTION OF OBLIGATORY EDUCATIONAL EXPENSES.)

If the holder of an office or employment of profit is obliged as a condition of holding the same to engage in certain studies or to receive certain tuition or examination, any expenses necessarily incurred by him in carrying out such studies or in procuring such tuition or examination shall be deemed to be incurred wholly, exclusively and necessarily in the performance of the duties of the office or employment, to be defrayed out of the emoluments thereof and accordingly to be deductible from the emoluments to be assessed.—[Mr. Prentice.]

Brought up, and read the First time.

Mr. R. E. Prentice: I beg to move, That the Clause be read a Second time.

The Temporary Chairman: With this new Clause No. 20 it might be convenient to the Committee to discuss new Clause No. 21, "Income Tax: teachers' books and refresher courses", new Clause No. 25, "Relief in respect of apprentices and technical education", and new Clause No. 47, "Income tax allowance for expenses on research and education".

Mr. Prentice: When the Chancellor of the Exchequer introduced his Budget, which now seems a very long time ago, he said that his theme was one of controlled expansion. I commend these new Clauses to the Committee and to the Government in particular because they are relevant to the question of expansion. In support of that, I quote from the first sentence of the first paragraph of the first page of the N.E.D.C. Report, "Conditions Favourable to Faster Growth":
Economic growth is dependent upon a high and advancing level of education because of the improvements that education brings in human skills and the greater spread of knowledge.
New Clauses 20, 21 and 25 are directed to using the tax system in a rather different way to encourage people to acquire skills and improve their knowledge. When we are talking about the importance of education as a means of improving the growth rate, we are concerned, among other things, with improving education at work, training for jobs and the way in which people can acquire extra skill through training courses of all kinds, whether at work, in a technical college, by correspondence courses

or various other methods. New Clause 20 refers to a situation in which someone has as a condition of employment to engage in certain studies or receive certain tuition or undergo an examination. It seems to make the costs incurred as a result costs which can be taken into account in assessing income for tax purposes.
There is quite clearly a two-fold case for this Clause. The first is the question of being fair and just to the people concerned. The sort of costs we are talking about are the expenses of the job. In our submission they should be considered in the same way as business expenses and other expenses which are at the moment taken into account. The disposable income of the man concerned who has to pay for tuition is what is left after he has paid for it and therefore this, as a matter of justice, should be taken into account.
The Clause is also related, as all these Clauses are, to the vital question of raising the degree of skill and training of people in jobs of all kinds and at all levels of responsibility. It is relevant to the practical situation which faces thousands of young people every year in choosing a job. They face the choice of deciding to go into a job which involves arduous training for some years, with the sacrifice of evenings and weekends to study, and then acquiring qualifications which will lead to better things, or going into jobs which demand less of them, which have just as good if not better pay in the early years but not the same prospects. This is a difficult choice into which all kinds of considerations enter.
The tax system, as far as it is relevant to this, should be used to encourage people to make the right kind of choice in their own interests and in the national interest. We should be encouraging courses of training, whether in industry, commerce or the professions, where those people are doing something in the national interest as well as in their own interest and the interest of their employers. In some cases the employers help with the cost. In others they do not. I should like to see employers helping more, but where the costs fall on the person concerned they should be taken into account in the tax system.
People who make this choice will be making a personal sacrifice of leisure,


and at the moment they have to pay the fees, which is a financial sacrifice. The Clause, in a modest way, would mitigate the financial sacrifice so that they would be encouraged to make the right choice.
The next Clause that we are discussing makes for teachers a similar kind of provision for the purchase of books or periodicals which they are obliged to buy to maintain their competence. The Clause also applies to refresher courses. Here again the same arguments apply. There is first the argument of equity, that this is necessary because of their employment and should be regarded as such. Secondly, there is the argument that we are anxious to do all we can to improve the supply of teachers and to encourage teachers to take these courses. The Clause should be seen against the background of the shortage of teachers and the need to encourage people to enter into and stay in the profession and not to leave to go into industry and commerce. Anything that can be done to improve the morale of the profession and to make teachers better teachers should be done by the Government, and the Finance Bill should be used as an opportunity to do it.
The third of these new Clauses which we are discussing provides a somewhat complex formula for giving an employer better tax reliefs in relation to the training which he provides for apprentices or other trainees, whether in his own place of employment or by paying sums of money to a technical college or some other institution for the training. Section 140 of the Income Tax Act, 1952, to which the Clause refers, gives relief for payments which an employer may make to a technical college and so on. This Clause would increase that relief and extend it to the cost of training at work.
5.45 p.m.
This subject was debated last year and in 1959. I felt it my duty to study the debate last year and I gathered that there were certain drafting difficulties which were pointed out by the present Minister of Education who was then at the Treasury. In trying to follow the arguments which he was using, I came across these words:
It is some years since I took the school

certificate, but, if I remember rightly. the sum of the convergent series one-third, one-ninth, one-twenty-seventh, and so on, is one half, and that for the sum to infinity of a geometrical progression the formula is R over 1 minus R."—[OFFICIAL REPORT, 29th May, 1962; Vol. 660, c. 1263.]
When I got to that, I gave up studying why the drafting of the Clause presented the Government with difficulty. I content myself now with the traditional formula by saying that this Clause may not be drafted clearly but the intention is clear and if the Government are prepared to provide something in their own words to meet that intention it will satisfy my hon. Friends and myself.
The aim is important. It is to see that there is a different tax treatment for the employer who does his share of training of new workers compared with the employer who does not. We are trying to give a financial advantage to the employer related to the amount of training and the number of people he trains and to ensure that, relatively speaking, the employer who does not do his share of training is penalised under the tax system.
We have discussed this for some time in the context of debates on industrial training. We know that a number of firms provide training schemes of a high calibre and do their share, and even more than their share, of training. There are many others who do not but who rely on poaching skilled workers trained elsewhere, and they find it sometimes more economical to pay a slightly higher rate to attract those people than to finance their own training schemes. We therefore suggest that the financial system should be used to redress the balance and give some help to the firm which does its share, or more than its share, and not to the others.
In France, a similar system has existed ever since the tax d'apprentissage was established in 1918. It provides for a special levy on firms employing skilled workers and gives a rebate in accordance with the amount of training they do, whether within their own premises or by paying some quota to another institution to do the training for them. There is no doubt that this stimulates the amount and the quality of training in France, because to obtain the tax relief the firm concerned has to meet the requirements


of an inspector. I think that that would be the consequence also of the Clause which we are now discussing.
This concept has had partial recognition from the Government. In a White Paper, Industrial Training: Government Proposals, published in December, 1962, they set out as one of the duties of the industrial boards which they propose to set up that these boards should be empowered to collect money from establishments in the industry by means of a leavy, and they said:
The Bill would provide that rebates could be allowed from the levy where firms were providing industrial training of approved quality.
We are entitled to say that this is something which we on this side of the Committee have been demanding for four or five years.
The noble Lord, Lord Robens, when he was a Member of this House, speaking at the Dispatch Box in a debate which followed the publication of the Carr Report, suggested that something of this kind should be done in this country. The Government have taken all this long time, as they always do, to catch up with the ideas of the Labour Party, but what worries me in the context of 1963 is that this is still merely a suggestion in a White Paper discussed by both sides of industry. If it is to be incorporated in a Bill this will not happen until the autumn at the earliest under the programme of the present Government, if the party opposite should still be the Government in the autumn.
Therefore, we are offering an opportunity to the Government to do something now—not to set up all the paraphernalia of industrial boards and so on which are outside the scope of the Finance Bill, but to use the Finance Bill as an instrument to do something now to encourage the firms which are doing their share of industrial training, and to penalise the others.
It seems to us that this is a method which must be used if any Government is really to do something positive to stimulate the quantity and quality of industrial training in this country. If we reject compulsion we have got to have some lever to use, and this is an important lever—a lever which has worked in France and in other countries in a different form, and it should be used

in this country if we are to make real progress in this important respect.
I concentrate on this Clause, partly because I know that some of my hon. Friends will seek to catch the eye of the Chair on some of the other Clauses, and also because I want to stress the importance of industrial training, not only in industry in the narrow sense, but in commerce, in the service industries and so forth, and it is important to the whole concept of growth.
We are short of skilled workers, even in the areas of local unemployment. We have the paradox in those areas that there is a shortage of skilled workers and unemployment amongst semi-skilled and unskilled workers, often creating a bottleneck which aggravates the situation. If we are short of skilled workers in relation to the present economic performance, we shall be much more short of them in relation to any 4 per cent. growth rate. Therefore, this is a question of some urgency, and the Government have not shown any urgency in dealing with the problem. This is one thing which they should do now by accepting the spirit of this Clause, drafting it in a more practical fashion and bringing it forward on another occasion.
The other Clauses to which I have referred are all of a pattern because they are all designed to do something to improve the levels of skill of people in jobs and professions of all kinds. This is one of the most urgent social questions pressing this country, and the Finance Bill should be used in an imaginative way to discourage bad practices and encourage good practices, whether by the workers concerned or by the employers.

Mr. Charles Fletcher-Cooke: I agree with the arguments advanced by the hon. Member for East Ham, North (Mr. Prentice) in support of this group of Clauses. I should like to widen the basis of his arguments. He emphasised the social and economic value of these reliefs, and I do not disagree with that, but I should like to plead the argument on grounds of equity.
I do not think it is generally realised that the benefits, so-called, which persons enjoy from these compulsory systems of training which they are obliged to undertake, whether they like it or not, as a


condition of their employment, are benefits upon which they are personally assessed. Whether it be subscriptions to polytechnics or night classes, or for books, or whatever it may be, since these persons are not actually working during such periods, even though they are obliged to undertake these courses or read these books, these expenses are regarded by the Revenue as benefits upon which they are personally assessed, even though they never see a penny of the money.
May I illustrate that fact from the case in which I last appeared at the Bar. The manager of a well-known bank was obliged by his employers to join a famous West End club. The subscription, which was paid directly by the bank to the club, was assessed upon the manager. The manager did not wish to join this club. Indeed, the evidence was that, broadly speaking, it was purgatory for him to go to the club. He hated every minute of it. Nevertheless, his personal tax account was assessed with the benefit of this subscription to this club because it was alleged, and indeed proved, to be of benefit to him that he should be a member of this club; and since he could not actually be working while he was having lunch at the club—not only because of the rules of the club but for other reasons—he was personally assessed on this benefit even though he never saw a penny of the money.
The same applies where trainees or employees are obliged, as a condition of their employment, to undertake courses at night schools or to read certain books. They are assessed personally on the benefit of these assets. It seems to me inequitable, apart from the fact that it is antisocial and anti-economic, that they should be so assessed, and this arises from the fact that they are assessed under one Schedule rather than under another. They are assessed under a Schedule which says that every benefit shall be taxed unless it is incurred not merely wholly, exclusively and necessarily but actually in the performance of their duties.
According to the decision of the courts, it cannot be said that while they are studying at a polytechnic or while they are undergoing periods of training they are actually working but that they

are merely preparing themselves to be better workmen or employees, and that is not enough from the point of view of that Schedule. Therefore, they are personally assessed on these benefits.
That seems to me quite inequitable, and I hope my hon. Friend the Financial Secretary will look at this point in a slightly wider framework than the context of the present Clauses, important though those Clauses are, from the point of view of getting a better and more highly skilled working population. I have great pleasure in supporting these Clauses.

Mr. James Boyden: I agree with much of what the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) said about the equity of the two proposed new Clauses dealing with teachers' books and refresher courses, and apprentices and technical education. Indeed, the people who take evening classes, and study even when their employers want them to do so, are showing enterprise and initiative above the average. Certainly their wives and children see less of them as a result. Therefore, this is essentially a matter in which, by these amendments to the Income Tax law, justice should be done.
I should have thought that the moment was opportune for the Government to accept the substance of these proposed Clauses. The Ministry of Labour is about to embark on a very large scheme for increasing industrial training. The Ministry of Education is very short of teachers and has great need to expand the teacher training force. The Treasury Ministers responsible for the universities have a great need to extend the amount of post-graduate training for the provision of post-graduates to become teachers in universities.
In view of the existing shortages, surely the tax law ought to be tilted in favour of those individuals undertaking training at their own expense and at their firms' direction—in some cases the local education authorities or the universities—to improve their qualifications to assist the nation in its present difficulties. Of course. this sort of training goes on. Considerable numbers of teachers and lecturers in educational institutions take post-graduate studies at their own expense; they take degrees and diplomas very much to the advantage of the nation as well as to their own advantage.
I should like to see it recognised as a principle, in this struggle to get more trained people, that the State should provide full salaries for people who, as it were, "remuster". That was the word which was used when I was in the Royal Air Force. One remustered from a lower job to a higher job, to the benefit of the man remustering as well as to the benefit of the Royal Air Force. If this were an accepted principle, some of our difficulties would be overcome.
I will give an example. In the teacher training colleges there is not exactly a surplus of lecturers in biology but there are enough to go round. There is a severe shortage of physics and chemistry lecturers. I have advocated before that every incentive ought to be given to enable some of the lecturers in biology to remuster to the other subjects. This goes wider than the actual Clause, Mr. Williams. I use it only as an illustration because I know that you are very prompt to reprove anyone going out of order. it illustrates in a broad sense the narrower a-gument which we are deploying now.
6.0 p.m.
If the Treasury is not prepared to accept the substance of the new Clauses, this will he evidence of a lack of co-operation in the Government. No one can say that the Minister of Education is not very anxious to have the maximum number of teachers. At least, this is what he says at the Dispatch Box, although the details of what is done do not always match the speeches. Here the Treasury Ministers have an excellent opportunity to put the protestations about the need to increase the supply of trained staff of all kinds into practical form in our tax law.
There is one sort of training which is very popular among industrial firms. Both the firms and the individuals concerned are put to considerable expense by it. I refer to the many correspondence courses schemes which are undertaken, the firms saying to their young employees, "If you take these courses, you will have better chances of promotion, and, in any case, we want you to take them". I hope that the Minister will be able to extend the wording which we propose to cover this sort of encouragement, which is not exactly an obligation but which is tantamount to it. Different firms have different

arrangements; some of them pay half the fees, some pay more and some pay none, but in all cases, I suggest, our Income Tax arrangements should be such that, wherever such schemes operate, a tax concession follows.
In the United States this is done in a very big way in quite complicated branches of education, in electronics, nuclear engineering, and so on. I have been quite staggered to note the importance and significance of correspondence education at a very advanced level in the United States. We are now offering the Treasury a means of doing something to push us a bit more in that desirable direction.
Turning specifically to the new Clause which deals with teachers' books and refresher courses, I understand that university teachers already get some concessions in respect of subscriptions to learned societies, the purchase of books, and even—a very tiny one—the wear and tear involved in the wearing of gowns. Whether this is applied to all similar people in educational institutions, technical colleges, schools and so on, I do not know. I know that I enjoyed some such concession when I was at Durham University.
If it does not apply to other branches of the teaching world, I very much hope that the Treasury will do something about it by publicity or, at least, by putting it in the descriptions of our tax arrangements so that everyone may benefit. As things are, even in the universities the arrangements are rather niggardly; they do not cover anything like the full cost of books and subscriptions to learned societies.
Whatever be the arguments based on the national interest, there is no doubt that teachers who take part-time courses in their own time, young men who take correspondence courses to improve themselves, lecturers in technical colleges who read for post-graduate degrees at their own expense, and the like, are usually the most conscientious and most lively of the people concerned. Therefore, I end as I began, in support of what was said by the hon. and learned Member for Darwen, urging that such people should be encouraged both in the interests of equity and in the interests of the nation as a whole.

Mr. William Clark: I am grateful to the hon. Member for East Ham, North (Mr. Prentice) not only for raising this debate, but for the very moderate way in which he put his case. There is a great deal of logic in what he and succeeding speakers have said about the need for tax incentives, to call them that, for educational purposes and training and retraining schemes. I understand that we are, at the same time, discussing the new Clause in my name and the names of several of my hon. Friends, "Income Tax allowance for expenses on research and education", and it is to this that I now direct attention.
The idea behind this Clause is somewhat narrower than that put by the hon. Member for East Ham, North. There is an anomaly in the Income Tax Act in that expenditure on research and education is allowable in a trade but not in a profession. I could give many examples, but the classic one is in engineering. If a man happens to be a constructional engineer in business, he can charge his education and research expenses. If he happens to be a civil engineer, that is, in the profession, he is not allowed to charge them. It seems obvious, with our emphasis on the need for retraining and the expansion of education, that this anomaly should be eradicated.
The anomaly has been on the Statute Book for far too long, since before 1952. I hope that the persistence of all my hon. Friends who have moved similar new Clauses in the past will meet with success today and that my hon. Friend the Financial Secretary will tell us that the Government are now ready to put matters right.

Mr. Tam Dalyell: The reason behind the new Clause which deals with teachers' expenses can be put quite shortly. A teacher should have every opportunity to refresh himself. A teacher who does refresh himself becomes a better teacher. Therefore, every opportunity and encouragement should be given to him to do so.

Mr. Peter Walker: I support what has been said by the hon. Member for Bishop Auckland (Mr. Boyden) about correspondence courses. The extent to which much of commerce depends on the correspondence course method for training young recruits is often underestimated. Last Friday, we

debated exports. One of the important factors mentioned was the invisible earnings of banking and insurance, and these are two businesses which depend almost entirely on the correspondence course method of education.
The incentive given by allowing a tax rebate to the pupil is, perhaps, not of great importance since many of the younger persons taking correspondence courses do not pay much tax, if any at all. However, there is every justification for ensuring that such expenses met by an employer are not apportioned to the employee concerned and that the employer is given every incentive to provide schemes of education through correspondence courses to his employees.
I hope that the Government will adopt a generous approach and accept a provision which will assist in this purpose.

Mr. A. E. Hunter: I support the new Clause the Second Reading of which was so ably moved by my hon. Friend the Member for East Ham, North (Mr. Prentice). It is a just Clause. A businessman is allowed to set his business expenses against tax. If he takes clients to lunch, he is allowed to make a claim against tax for that purpose. It is only fair that a student or teacher at a university, training college or school should be allowed to claim relief in respect of the books, periodicals or reference volumes which he buys to help him in his profession. I am very glad that this just proposal has been supported by hon. Members on both sides of the Committee. It is difficult to see what case the Government can make against it.

Mr. Kenneth Lewis: I congratulate the hon. Member for East Ham, North (Mr. Prentice) on introducing the new Clause, because I think that the question of training will be of great importance in this country in the next few years.
Perhaps it is not possible to accept some of the suggestions which have been made, but I hope that the Chancellor of the Exchequer, when looking at the question of training, will bear in mind that some firms are bearing the burden of training. It is absolutely essential that the load should be spread and that we should take from those who are not giving the support to the training effort which they should and give to those who


are so that there is an evening out of the load. We should use taxation to expand training. We should make it an essential part of any industrial undertaking's obligation that it should take apprenticeship training seriously and should make a contribution in that way to the national effort.
I believe that in trying to secure an expansion of university education we must consider the correspondence course. There is great scope for development here. Many young people want to take correspondence courses. At present, the obligation is entirely on them. I am not sure that the local authorities and, indeed, the Ministry of Education should not take some responsibility in this matter and accept it as part of the charge on education that people should have the same opportunity to take degrees through correspondence courses, paid for by the Government or local authorities, as they do if they attend university full-time.
Training is important in all its aspects. It does not matter how our young people get their training, whether they do it in or out of their own time. The important thing is that the end product is available to the country. Anything that we can do to encourage that end product will be to our advantage.

Mr. William Hannan: I support the new Clause. I am not sure about the trend in England and Wales, but the trend in apprenticeship studies north of the Border is to get away from evening classes and into day-release classes and to take what are known as sandwich courses, during which the student goes to college for six months and then does a job of work for the remaining six months. In attending evening classes, a young student is involved mainly in transport costs. Now that the trend is going the other way, he is still involved in transport costs, but he cannot always get a meal at lunchtime without being involved in further expenditure.
We all agree about the need for more trained minds in industry. We have had the Industrial Training Council. The Government have been pressed by many of us to make day-release compulsory. Whatever may happen in future about that, should not the Treasury anticipate that happy prospect and make provision

for our young people? We increase taxation in many respects, such as on gambling, betting and drinking, to dissuade people from forming certain habits. Cannot we look on this proposition as a positive form of encouragement for our young people? We want to encourage the desirable things in life. We all agree that this new Clause is very desirable from the nation's point of view, and I therefore hope that the Minister will accept it.

Mr. A. P. Costain: As a Member who, in past years, has tabled a new Clause similar to the one entitled "Income tax allowance for expenses on research and education", I add my support to what has been said by my hon. Friend the Member for Nottingham, South (Mr. W. Clark). There is an anomaly here which applies not only to the building industry, but to the shipbuilding industry. It is wrong that a firm which builds ships should have tax allowances for research and education whereas a firm which designs ships should have no such allowances.
The greatest undeveloped asset which we have in this country is brainpower, and any tax advantage which can be given to encourage the greater assimilation of knowledge is a capital investment, because if people have greater brainpower and greater ability they will earn bigger salaries and thereby will benefit the Exchequer by paying larger sums in taxation.

6.15 p.m.

Mr. A. R. Wise:: Every speaker so far has ignored one section of the community which has to make great sacrifices to carry on further education. I am not all that worried about firms which incur expenditure in training young people. I do not believe that the poaching done by firms which do not have such schemes is nearly as thorough as some people think. I am sure that firms which have training schemes, although they are patriotic and delightful men, have a shrewd idea that they are up on the deal on balance, whether their people are poached or not. Although this may be a form of incentive which is, perhaps, praiseworthy, it is not a vital point.
I do not think that the idea of my hon. Friend the Member for Rutland and Stamford (Mr. K. Lewis) of trying—

Mr. Prentice: Will the hon. Gentleman look at this against the background of the shortage of skilled workers in many vital industries? If he studies some of the statements of the Minister of Labour, he will see that there is this overall shortage which could be corrected if the firms not doing their share of training were doing as much as the firms which are carrying out training. Those are the firms at which we are aiming in the new Clause.

Mr. Wise: I do not think that that is the key point. I do not believe that firms which do not have training schemes will be induced to start them by a very minor tax concession on a very small part of their expenditure. I do not say that this tax concession may not be a good thing in itself, but I do not think that it would fulfil the purposes which the supporters of the new Clause have in mind.
The people whom I have in mind are parents. There are many parents who have great expenses in maintaining their children at universities, and these expenses cannot be offset, except in a very minor degree, against their income.

The Temporary Chairman: Naturally, I have a lot of sympathy with parents, but not under these new Clauses.

Mr. Wise: I did not realise that I was straying from the Question, Mr. Williams, but I have made the point that I wished to make.

The Financial Secretary to the Treasury (Mr. Anthony Barber): The hon. Member for East Ham, North (Mr. Prentice) said that it seemed a long time since my right hon. Friend the Chancellor of the Exchequer delivered his Budget. Earlier this afternoon, I thought that it would seem even longer after we had got through all the various new Clauses on the Notice Paper. But anyone who has been here during this debate will agree that it has been a model debate in the sense that every speech—and quite a lot of hon. Members have spoken—has been concise and to the point. I will do my best to follow that excellent example.
The hon. Member for East Ham, North pointed out the vital importance of education and training, both technical and commercial, and the great contribution which such training can make to economic growth. He also reminded us of the truth that in some of the areas of high and persistent unemployment there is nevertheless a shortage of skilled workers. I agreed entirely with his opening remarks.
I start, therefore, with considerable sympathy for at least some of the objectives in the new Clauses, and I agree with my hon. Friend the Member for Nottingham, South (Mr. W. Clark) that the speeches have been both moderate and knowledgeable. I was particularly interested in what was said by my hon. Friends the Members for Worcester (Mr. Walker) and Rutland and Stamford (Mr. K. Lewis) and the hon. Member for Bishop Auckland (Mr. Boyden), who has special experience in these matters, about correspondence courses. I agree entirely, from my limited knowledge of these matters—to some extent I have been on the receiving end of correspondence courses—that these are very important.
There is some slight misunderstanding about the tax liability of a normal employee—an apprentice, for example. I am not talking about a person earning £2,000 a year or a company director but about the person who has his training expenses paid for him by his employer. Assuming that the course, be it a correspondence course or a course at a technical college, was connected with his work, then he would not be regarded by the Inland Revenue as receiving an assessable benefit and the payment would not attract tax liability. This is a general point relevant to more than one of the new Clauses, and there seems to be a misunderstanding about it.
It is not easy to deal with these four Clauses together because, although they all deal with matters of taxation in respect of education, they raise somewhat different points. The most convenient course, therefore, is for me to follow the hon. Member for East Ham, North and to deal as briefly as I can with them seriatim.
The first new Clause provides that where an office holder or employee is required as a condition of holding his office or employment to follow a course of study or to take examinations, he is


to receive an Income Tax deduction for any expenses necessarily incurred by him for these purposes. The general rule at present is that expenses for which an employee or office holder can claim a deduction are limited to those incurred wholly, exclusively and necessarily in the performance of the duty of the office or employment. That rule precludes a Schedule E deduction of any expenses which are not incurred in the performance of the duties of the employment.
The new Clause raises the question whether the law should be changed to cover the kind of cases which have been mentioned. My hon. and learned Friend the Member for Darwen (Mr. FltecherCooke) said that he was concerned most of all with equity—and he referred to a case with which he had dealt in the courts. I think that he will agree that it is clear that any general change in the Schedule E expenses rule which substituted the employer's requirements for the existing statutory test would be indefensible, and yet I understand that this is what is proposed in the first new Clause.

Mr. Fletcher-Cooke: That would depend on how reasonable the requirements were. If an employer required an employee to go to John o'Groats and to do some fishing, however much he required it, nevertheless it would not be reasonable and desirable. If the requirements were reasonable in fitting and educating the employee to take up his employment or to improve as an employee, why should the expenses not be allowed just as much as expenses in the performance of the job?

Mr. Barber: I will come to that later, but I started by saying that one could not proceed on the basis of the new Clause. This is not a drafting point. The Clause refers specifically to
studies or…tuition or examination
which a person is obliged to undertake as a condition of holding the office or employment. That is fundamental to the Clause.
If we were to do as is proposed in the new Clause it would leave it open to an employee to obtain tax relief for all sorts of expenditure as long as he could show an order from his employer which required him to undertake that

expenditure if he wished to keep the job. Nobody would deny that even in the limited field covered by the Clause there would be real possibilities of abuse. The great majority of employees who go to classes of one kind or another, do so—and this is very much to their credit—primarily for personal reasons, either in order to advance themselves in their chosen profession or to fit themselves for another job.
As the relief would be due under the Clause, whether or not the subjects of the classes related to the employment, if the employee could produce authority from his employer showing that he had been ordered to attend, to sign such a statement would enable the employer to provide tax relief for the employee at no cost to himself. I have not the slightest doubt that some employers would yield to the natural temptation to do their employees a good turn in this way. I should be very surprised if that did not happen.
Even if the Clause were amended so as to require, as my hon. and learned Friend the Member for Darwon suggested, a close link between the duties of the employment and the subject of the classes, the possibility of abuse would still remain, because the Revenue would not normally be able to dispute any certificate given by the employer for a matter of this kind. But there is more to it than that, as I will explain—and this is relevant to what was said by my hon. and learned Friend and the hon. Member for Bishop Auckland.
If relief were given on the lines proposed in the Clause—I am not concerned with drafting points—in practice it would not be possible to hold the line at cases in which the training is a condition of employment or stated by the employer
to be a condition of employment. It would be impossible to justify giving tax relief to an employee in one firm for a course of training which he was required to undertake while at the same time refusing it to an employee doing comparable work in another firm and taking precisely the same course voluntarily and not under compulsion. That would be grossly unfair to the enterprising young man who happened to have picked the wrong employer.
But relief could not be given to the voluntary student without making a wide


breach in the fundamental basis of the Schedule E expenses rule that expenses must be incurred in the performance of the duties and not incurred voluntarily, however laudable the motive for incurring such expenses might be. If we were to do that it would be very difficult to know where to stop. The hon. Member for East Ham, North did not pretend that he wanted to go any wider than is suggested in the new Clause. Quite apart from the merits, I must advise the Committee that the first Clause is such that, however one tampered with the drafting, the proposals would in my view still be both impracticable and inequitable.
The second new Clause provides that a teacher employed by the local authority is to be given tax relief in respect of any expenditure on books, periodicals and refresher courses which he is necessarily obliged to incur
in order to maintain his Competence as a teacher in relation to education developments and to improvements or changes in teaching techniques.
6.30 p.m.
The hon. Member for East Ham, North said that what he wanted to ensure was equity. But I cannot, for the life of me, understand why the relief should be given only to teachers employed by local authorities. I cannot comprehend that. No doubt there is some hidden motive behind such a restriction, but it would seem grossly unfair. However, I am sure that the Committee will appreciate that there is another reason why this proposal cannot be accepted, certainly as it stands.
It would be quite impossible to give a tax relief of this kind—even if it were extended to all teachers—to teachers in isolation. The solicitors, doctors and surveyors in the employ of local authorities have just as much need as the teachers to keep up to date in their professional matters. The alternative course, if it were desired to give relief for such expenditure, would be a general provision making available to every Schedule E taxpayer relief on expenses of this kind incurred in connection with his employment.
It is really impossible to frame a general provision of this kind without going far too wide in relation to the difficulties. For example, it would permit claims for allowances for books for what

would really be little more than general reading of a serious kind. Again, a civil servant could claim, with some justification under such a rule, a deduction for the cost of any book on public administration and even perhaps a book on the history of a particular overseas country with which he had to deal in his official work.
How could one effectively test whether certain books and periodicals were not otherwise reasonably available to teachers? I suppose that we would have to call for lists of expenses from those putting in claims and scrutinise each by reference to the nature of the claimant's job and making inquiries as to whether certain books and periodicals were justified. That would be a pretty large operation. Therefore, it would be particularly difficult to proceed on the general lines proposed for the case of one group of teachers.

Mr. Dalyell: Will the hon. Gentleman give an undertaking that he would be prepared to meet the N.U.T. on this subject?

Mr. Barber: I am always prepared to meet a responsible body like the N.U.T. if it wishes to meet me. But the N.U.T. has not approached me. No doubt if it wishes to do so it will make representations.
I cannot ask the Committee to accept the principle behind the Clause and I am sure that the hon. Member for East Ham, North himself would not wish to support a Clause which was restricted not merely to teachers but to a certain limited category of teachers—those employed by local authorities.
I hope that the Committee will acquit me of discourtesy if I deal rather shortly with the third new Clause we are discussing because, as the hon. Member for East Ham, North observed, it is somewhat complex. The reason why I hope that I may be permitted to pass over this without dealing with it in detail—although I will answer any points hon. Members like to raise on it—is not that it is unimportant. On the contrary it raises a most important point.
As I understand its intention, it would probably cost about £10 million a year. The Clause is in the same terms as one


which was moved in 1959 and another moved last year. On both those occasions the Committee decided that the proposal was unacceptable.
The intention of the Clause is to give, through the taxation system, a Government subsidy, in effect, in aid of non-productive wages paid to apprentices released from normal duties to undergo formal instruction, and of other costs of their training. I should perhaps say that the Clause as at present drafted would do something else, but I think I understand the intention behind it.
Judging by one or two speeches about the existing tax treatment of expenditure associated with apprentice schemes, there appears to be some misunderstanding. As the tax code stands at present, both the revenue expenditure and the capital outlay which a trader incurs in connection with an apprenticeship training scheme receive due recognition. The revenue expenditure is deductible as a trading expense in the ordinary way in the computation of profits, and capital outlay on the provision of assets which the trainer himself uses for training purposes can form the subject of a claim for capital allowance appropriate to the type of asset in question.
I will not trouble the Committee again with the way in which this works out in practice. Of course, there is an urgent need to raise the amount and the quality of apprenticeship training, particularly in small firms. The hon. Member for East Ham, North referred to incentives to industrial training in France, but was fair enough to recognise that since last year, when we debated a new Clause on similar lines, the Government have published their own new proposals on industrial training. I will not remind the Committee of the details. Suffice it to say that they involve financing in part, by a levy on firms, and that the Minister of Labour will be empowered to make grants and loans. The hon. Member regretted that we have not made more progress with this, but when one is embarking on a venture which involves both the Government and various industries, I think one is bound to take a little time to finalise ideas. At any rate, these new proposals have been generally welcomed.
What objections to the proposals in this Clause remain? In particular, it would amount to using the tax system to

give a Government subsidy towards the cost of apprenticeship training. I am sure that the best approach to this important matter is one adopted by my right hon. Friend the Minister of Labour, coupled with the existing tax treatment of expenditure associated with apprenticeship schemes. I would, therefore, advise the Committee to follow the same course as last year, when a similar Clause was debated.
I come now to the last of this series of new Clauses. It stands in the name of my hon. Friend the Member for Nottingham, South. It is rather different from the others. It would provide that a person carrying on a profession would get tax relief for certain expenditure on education and scientific research related to his profession, in the same way as a trader gets relief for like expenditure on education and scientific research related to his trade. All the reliefs referred to in this Clause are reliefs under Section 140, Section 335 and Section 336 of the Income Tax Act, 1952. I am sure that the whole Committee will be as familiar as I am with the details of those three Sections.
A proposal to extend the relief under Section 140 was debated last year and was not accepted. Indeed, this proposal was considered both before and during consideration of the Finance Act, 1959. The whole question was again considered by my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) in 1961, and my right hon. Friend looked into it again this year before framing his Budget proposals. I am afraid that he came to the conclusion that there really are considerable difficulties about doing what is proposed.
Perhaps I should remind the Committee that Section 140 of the 1952 Act, which this Clause seeks to amend, provides that, notwithstanding the general rule that no deduction is allowed when computing taxable profits, for, inter alia, any form of capital expenditure, a person carrying on a trade may deduct any payment made by him to be used for the purposes of technical education related to that trade at a university, technical college or similar institution. Technical education for this purpose is defined.
I think everyone will agree that although the relief given by Section 140.


which is the nub of my hon. Friend's proposed new Clause, may be justified, it is anomalous. I understand that the reason for it when introduced in 1946 was the need in the national interest for ever-increasing productivity. Certainly that needs remains today.
I quite understand the wish of those who want to extend this and the other provisions referred to in the new Clause to cover professions as well as trades, and I accept that the fact that the professions were deliberately excluded from the relief when first introduced is not conclusive. Furthermore, nobody nowadays would deny that the professions have a major part to play in the development of the economy. None of these factors I deny, but there are difficulties.
To extend the provision to professions would make it possible for a professional man to make a capital contribution to a college or school where, for example, shorthand is taught and to charge it as a revenue expense. I dare say that that sort of thing is not what my hon. Friends had in mind, but it would seem to follow. It would be far removed from the objective of the original provision, which was to foster technical education, although, as I say, that is not conclusive.

Mr. Geoffrey Stevens: I do not have the Income Tax Act, 1952, with me, but I remember Section 140 reasonably well. I am fairly certain that the educational establishment has to be approved for the purpose by the Ministry of Education.

Mr. Barber: That may or may not be so. As the Clause is drawn, however, the sort of capital contribution to which I referred would be allowed. Without taking up the time of the Committee, it would be difficult for me to deal with the point. I will, however, pass my hon. Friend a piece of paper and we will be happy to accept whatever his interpretation of the Section may be. We agree that it is desirable to encourage general education, but I doubt whether a tax relief of this kind is the right way to provide that encouragement.
There is also the difficulty that the existing law works out in strange ways. For example, farmers are within the scope of Section 140, because the Income Tax Acts specially provide that farming

is to be treated as a trade for tax purposes. One farmer has claimed a deduction for fees paid for his child at an agricultural college and in a recent case the High Court has upheld the farmer's contention. This case will in due course be considered by the Court of Appeal and, therefore, I can do no more than draw the Committee's attention to it.
I understand the purpose of the new Clause, which would cover professions such as civil engineering, to which my hon. Friend has referred, and other analogous professions. I hope, however, that I have said enough to convince the Committee that, quite apart from the merits of the proposal, there would be practical difficulties in ensuring that the relief in respect of professions was not claimed in circumstances which no hon. Member in the Committee would wish to cover.
This is not one of those cases in which I can promise effective consideration before Report, but in relation to the last of this group of new Clauses my right hon. Friend will consider the whole question during the coming year. I am sorry that I have taken so long to deal with this group of new Clauses, but they raise important issues and it was not possible to deal with them, as it were, all in one go.

Mr. Frederick Willey: Our sorrow is not at the length of the Financial Secretary's speech but at the conclusion he reached at the end of it. I have no wish to destroy the languor which affects discussions on the Finance Bill, but we have had a very unsatisfactory reply in view of the amity and accord which existed on both sides of the Committee before the Minister's intervention.
6.45 p.m.
I should like to make one or two points. Previously the argument against proposals such as this—the Minister of Education made it, apart from the obscure references in the early part of his speech last year, when he deployed his argument against discriminatory taxes—has been that the Government could think of no worse form of taxation than one which discriminated, for example, between one area and another. I come from an area of heavy unemployment. That particular doctrine


has been abandoned by the Treasury. I hope that we can make similar progress in this field.
I hope that the Financial Secretary will take a novel approach to the proposals contained in these new Clauses. I hope that he will go back to the officials who have so carefully briefed him, and to whom he has done such great justice this afternoon, and tell them to take an entirely different approach. He should call their attention to our debate today and say, "Here we have a position in which hon. Members, on both sides, have deployed reasonable arguments in favour of three propositions. They are that we should seek, if it be possible, through discrimination in taxation to help those young people who go into professions and who ought, admittedly in the interests of their professional careers but also in the interests of the professions, to continue and pursue their education; to consider teachers, who ought, admittedly in their own interests, too, but also in the interests of education, to pursue their studies after they have begun to teach, and also the broader question of providing if it is possible, by this means an incentive to apprenticeship."
The hon. Gentleman should go back to the Treasury and tell his officials that this would be a glorious holiday for them. They need not sit in their third floor back destroying every proposal which is made in the House of Commons with all the possible hypothetical objections that might be envisaged, the fantastic abuses that might result or the procedural difficulties that might arise. He should tell his officials that these appear to be three current, topical proposals which are important to both education and industry and that they should see what they can do.
That is what the hon. Gentleman can do. I am heartened by two facts. The first is that the essential argument which hitherto, until this Budget, has been deployed against proposals such as this has been abandoned. Secondly, for the first time when such Clauses have been discussed, neither a Minister from the Ministry of Labour nor a Minister from the Ministry of Education has accompanied the hon. Gentleman. In view of the role he played last year, I thought the Minister of Education might consider

it a friendly gesture to sit next to the two Treasury Ministers in their isolation, but no. Even the Minister of Education has preferred to be absent. That is significant.
Let the Financial Secretary go back to the Treasury and say that these proposals have been made year after year, just as I have made proposals in the House or in the Committee year after year about discriminatory taxation to help particular areas. This was turned down in just the same way. These proposals have been made at a time when there is desperate need not only to do something to promote and encourage education but to give the appearance of doing it. That is what is required, and the same is true about apprenticeships.
In its humble way, the Treasury could help. I hope that the Financial Secretary will not be content to live only in his briefs—[Laughter.]—

Mr. Barber: I do not want to pursue the unfortunate line that the hon. Member is developing, but I recall to him that at the end of my observations I made it clear that at least the new Clause in the name of my hon. Friend the Member for Nottingham, South (Mr. W. Clark) envisaged certain proposals which, I thought, we should consider during the coming year; and this we will do. There is a case pending which refers to Section 140, and I am sure that the hon. Member would not wish me to say more than that.

Mr. Willey: I am delighted that I am attracting the hon. Gentleman outside his brief. But he is just peeping outside. I am asking him to jump outside it and to take a fresh look at this matter. I hope even now that between now and Report the hon. Gentleman will consult his advisers at the Treasury to see what can be done.

Mr. Hirst: I see the logic and the sense of the argument of my hon. Friend the Financial Secretary, particularly on Clauses No. 21 and 22, but there is a great difference with new Clause No. 47. I am a fairly old soldier in this Committee, although I see that there are some round about who are older. I see that my hon. Friend the Economic Secretary is smiling, but I must tell him that a similar remark was made before you took the Chair, Sir Robert. The


fact is that we have heard these arguments before, although not necessarily always expressed as charmingly.
My hon. Friend was good enough to remind us of some of the occasions on which this matter has been discussed. I have taken part in debates of this sort, particularly under the leadership of my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) who has been fighting this battle from this side of the Committee for many years. We have constantly heard it said that the matter would be studied again in the course of the year. That is a phrase which chills the hearts of the old soldiers in the Committee precisely because we have heard it before.
I therefore press on the Treasury Ministers that they must realise that when the Inland Revenue or the Customs and Excise wants to do something, it does not matter who sits on the Treasury Bench, even if there are rows of Ministers, they are bulldozed into producing something to implement those wishes in the Finance Bill. This is a matter of will. Do the Government believe, in the context in which it has been argued, that there would be reasonable justice in including professions as well as trades in the list of suitable purposes mentioned by my hon. Friend the Member for Langstone?
I cannot remember anything about Section 140 of the Income Tax Act, 1952, but even if my hon. Friend the Member for Langstone is not right—and he usually is right, for he is very well informed on these matters—the Treasury ought to be able to think up some method of achieving our object and limiting the degree. It is a matter of will. If the Government consider that something of this kind is desirable and just, they have only to tell the drafting people to find the answer and they will do so. They do so every time the Treasury wants to push something on to Ministers, whether the Government want it or not, as we have seen dozens of times. We cannot go on year after year receiving the answer that the matter will be studied in the course of the year. It is not a matter of honesty but of the desire of the Government to do something. If the Government want to do something, they can do so without that excuse and it could all have been done before.

Mr. Boyden: I invite the Committee to cast its mind back to the days when Treasury Ministers were saying that it was impossible to abolish carnets for taking cars overseas. Practically every European country has since abolished them.

Mr. Barber: As I was the Economic Secretary, and therefore responsible for Customs and Excise, when the carnet was abolished, I think that I deserve a little credit for that. Knowing my hon. Friend the Member for Shipley (Mr. Hirst) as I do and knowing his constituency to be a very safe Conservative seat, I am sure that he will be with us for many years to come.

Question, That the Clause be read a Second time, put and negatived.

New Clause.—(PERSONAL RELIEF FOR DONATIONS TO CHURCHES AND CHARITIES)

Part VIII of the Act of 1952 (so far as relating to personal reliefs) shall have effect in respect of the year 1963–64 and any subsequent year of assessment with the addition immediately after section 209 thereof (which relates to personal reliefs) of the following section:—

"209A. If the claimant proves that during the year of assessment he has made donations to churches and charities amounting in cumulo to a sum in excess of ten pounds, he shall be entitled to a deduction from the income tax with which he is chargeable equal to tax at the standard rate on the amount of such contributions or on one tenth of his income, whichever is less".—[Mr. Hendry.]

Brought up, and read the First time.

The Deputy-Chairman (Sir Robert Grimston): I think that with this new Clause No. 27 we can discuss the new Clause No. 28, "Surtax on settlements for churches and charities" and the new Clause No. 29, "Deductions for certain donations to churches and charities."

Mr. Forbes Hendry: I beg to move, That the Clause be read a Second time.
These three new Clauses are designed to assist the State, through the fiscal system, to discharge its responsibility for a part of our national well-being which is often forgotten. In this country we have a welfare system which is the envy of the world. Almost all our material needs are catered for, and health and housing and education have reached levels which were not dreamed


of fifty years ago. Almost everybody in the land has achieved a very high standard of living, and rightly so.
Sickness and old age have lost the terrors that used to be connected with them, the terrors of possible destitution, but sickness and old age have not lost, and cannot lose by the operation of the Welfare State, the terrors which only spiritual comfort can remove. These terrors are equally real and they cannot be dealt with by a Welfare State. They must be dealt with by outside agencies, principally the Churches and charities which bring the spiritual comfort and the human sympathy which are so necessary.
The tragedy of the present day is that the very system of taxation which has produced unparalleled material prosperity has undermined the spiritual agencies by largely drying up their sources of finance. At a time when, in the material sense, we have never had it so good, it is true to say that in the spiritual and moral sense we have never had it so bad. The very influences which could cure the situation are being starved of their very lifeblood by the incidence of taxation.
At a time when the ordinary people are being shown a deplorable example by full newspaper reports of sordid and disgusting divorces, large housing estates are being deprived of the churches which they so badly need and which cannot be built for the lack of a sum of money which is small compared with that squandered on the costs of a recent and particularly notorious divorce case. At a time when any publisher has only to publish an indecent book to make vast profits, there are country parishes without a clergyman nearer than 20 miles.
All this stems not from any positive Government policy, but largely from the fact that the taxation system which has produced such excellent material results has eroded away the means of support for our spiritual needs. The incidence of taxation has made the giving of the traditional tithe quite impossible, without putting anything else in its place. These Clauses are an attempt to put that right.
The first is simply to enable individuals to give the churches and charities up to the traditional tithe of their income. This is not a new principle of taxation. It is firmly based on tradition throughout the ages in this country. It is still the current

standard taxation practice in the United States and in Canada, where allowances from taxation are given up to the tithe of the taxpayer's income.
I fully appreciate that this proposal might cause a good deal of administrative trouble in the case of very small claims, and, to avoid undue administrative difficulty, I have suggested a lower limit of £10. Anyone who genuinely cannot afford to give £10 a year to churches and charities has no Income Tax problem anyway. On the other hand, any provision which would increase the average contribution given to Churches and charities to only £10 would make an inestimable contribution to the welfare of those agencies.
It is incredible but true that it was reported to the General Assembly of the Church of Scotland last year that the average contribution to that Church was only £3 17s. 10d. a year, so it is obvious that to increase the average to only £10 would make a revolutionary change in the finances and well being of that Church.
I do not want again to draw attention to the poverty in which the clergy try to do their work. It is much more important to show that unless somehing is done, and done quickly, there may soon be no clergymen at all to do the work that has to be done.
7.0 p.m.
Recently, I was asked to give legal advice to an ancient congregation who were condemned to extinction by their inability to find a Minister. I was interested in the situation, and on looking into the facts I found that in the Church of Scotland there were only 40 or 50 candidates preparing themselves for ordination to meet an annual wastage of well over 100. I do not belong to the Church of Scotland, but I know that other denominations are in a similar plight. With their present resources the Churches cannot start to compete with other callings for young men of the proper calibre and education.
I am sorry that I cannot estimate the cost of my proposal, but I am convinced that it would not be serious from the point of view of the Exchequer. On the other hand, the effect on Churches and charities of quite a small sum would


be quite spectacular, and possibly my hon. Friend can tell the Committee of the experience of the taxation authorities in the United States and Canada, where such a system has been current for many years.
My second new Clause is intended for a rather different purpose. What I am aiming at here is the restoration of the right of Churches and charities to recover not only Income Tax, but Surtax in respect of the income they derive from 7-year covenants. Some years ago this right was denied them, but its restoration would involve no new principle of taxation. Indeed, it is possible for a taxpayer to a give a 7-year covenant in favour of an individual priest or an individual Minister or an individual beneficiary to a charity and enable that person to recover the Surtax benefit.
To restore this right to Churches and charities would give no advantage whatever to the taxpayer, but it would be of great value indeed to the charity or Church which stood to benefit from it. I suggest that it is only justice that this right should be restored to Churches and charities, because they have lost a great part of their income from the success of the Government in handling the fiscal system in recent years.
The reduction of the standard rate of Income Tax to 7s. 9d. made great reductions in the covenanted incomes of Churches and charities. This has been accentuated every time the Chancellor has found himself able to relieve other groups of people from the incidence of the standard rate of Income Tax.
These losses are very serious and they cannot be made up by increased generosity on the part of the donors, because to do that would mean tying themselves up for another seven years at least of an unchartered future, and the only way that I can see of restoring the losses which have been suffered by the Churches and charities in this way is to restore the right to recover Surtax as well as the Income Tax deduced from the income involved in these covenants. I stress that this would be of great advantage to the beneficiary, but that it would be of no material advantage to the taxpayer.
My third new Clause is complementary to the first. It applies to companies as

opposed to individuals, and I am advised that for technical reasons it is not possible to combine the two in one new Clause. This Clause seeks to enable companies to play their part in this aspect of our national well-being. In America and Canada companies as well as individuals are entitled to give up to a tithe of their incomes to Churches and charities.
With a view to upsetting to the least possible extent my right hon. Friend's budgeting for this year, I have been much more modest in my proposal and I have limited myself to proposing that they should be allowed to give up to 1 per cent. of their income. This would cost the Exchequer the very modest sum of £30 million, but it would yield to the recipients no less than £20 million. This is indeed a princely sum by their standards, though a comparatively small sum by national standards.
I think that I need make no elaborate justification for this proposal. A company may charge against its profits the provision that it makes for the material welfare of its employees. It can charge clinics, sports grounds, recreation halls, holidays, and that sort of thing to its profits. All these are allowable, but if the company proposes to give a donation to build a church which is just as much needed by its employees, it is not possible to charge this against profits. There is no practical possibility of a company granting 7-year covenants. It is not possible for a company to mortgage its future profits in that way, because there may be no future profits to mortgage. On the other hand, an unexpected success, or a specially good year, may well prompt the directors of the company into some special act of thanksgiving, but at present they could not do that until the tax gatherer has taken his share.
This nation has a great tradition for maintaining high principles. Throughout the centuries we have been world leaders in setting a standard of values. Now it seems that we are rapidly degenerating into worshippers at the shrine of materialism because our standards have been neglected. Let us do something before it is too late to make sure that we realise our responsibilities in the matter. My hon. Friend has a great opportunity here, and I urge him to show his concern for this side of our national welfare by accepting


at least one, if not all, of these three new Clauses.

Mr. Norman Cole: I support my hon. Friend the Member for Aberdeenshire, West (Mr. Hendry) on these three new Clauses. If I differ from my hon. Friend at all, it is only in the fact that he was rather more apologetic than he need be in asking for these concessions.
No one can deny that our material standards have increased immeasurably since the war and some of us feel—and I believe that our opinion is shared by many people in this country—that the more serious parts of life, the spiritual parts, have not for one reason or another kept pace with our material advances. One of the outward indications of this spiritual side of our life is the provision not only of places of worship but the provision of those who will conduct and lead that worship.
I have recently had the unfortunate task of presiding over the ending of a church which in the course of the next week or two is to be demolished. The church is not 400 or 500 years old but only 80 years old, and yet in a few months it will no longer exist. Instead, we shall have other buidings on the site. I do not believe that we want to see this kind of thing happening all over the place.
None of the churches, free or established, has enough money to keep itself going in comparison with other walks of life, and very few people, except those in substantial livings, have what might be considered a reasonable salary. I do not agree that there will be a shortage of ministers in future, because I think that there will always be decent men, and decent women, who will do this job, but is it right that in a society as affluent as ours we should take advantage of the generosity of these men and women and continue to get leadership in religion at a cheap rate? This, in fact, is what is happening. We are getting our leadership in spiritual values on a cheap basis.
We have passed from the idea of a certain portion of a man's or woman's income being given to the Church, and as distinct from hundreds of years ago when Churches probably represented the wealthiest sections of the community they are now in many respects the poorest in the community. This country has

nothing to be proud of in that fact. What is it that we are asking for? We are not asking for anything to be given out of the huge Budget income but that something should not be taken away.
In dealing with the seven-year covenant to which my hon. Friend referred, I have never understood why it could apply only to the standard rate of Income Tax and that if a man was forced to pay the standard rate plus a certain amount in Surtax, the Surtax part was gathered by the Treasury. Why should this be so? I cannot believe that this is too complicated. It indicates a very considerable lack of generosity, a sort of halfway measure to try to palliate the position and one which is not prepared to go the whole way.
We have many cases of people who make their contributions to churches. Many people, thanks be, make their contributions to the Free Churches and the established Church. They pay out of taxed funds. Sometimes it is not possible to make a covenant and the money they give they have already paid tax on. Therefore, the Churches lose because not many people are necessarily able, or in a position, to add back the amount of tax which they have already paid. I believe that if the Chancellor—or his Ministers—was prepared to give a lead in this matter, to make the sort of concessions which are covered by these three Clauses there would be hardly a dissentient vote.
I would not be convinced—I warn my hon. Friend in advance—by the sort of argument to which we listened earlier about the complications of doing this, because already the system exists to a very large part. Some parts dealt with in the second of the three Clauses about settlements may be somewhat new, but the matter of putting a Surtax basis in place of the standard rate as regards covenants is certainly not new. It is a question only of allowing the maximum rate on Surtax paid at 17s. 9d. in the £ instead of on 7s. 9d.—that is all there is to it.
I am quite aware that Surtax is collected under a different method and in a different way, but the final result on the taxpayer's annual return is quite easily arrived at. I admit that the third Clause may strike a new principle in regard to contributions by firms in the future. But, there again, this is not insuperable.
I hope that in the reply we get to our arguments about these three Clauses, we shall have a clear, outspoken reply if these are not acceptable in principle, because and I believe I speak for my hon. Friend, will not be satisfied by being told that they are accepted in principle, but are impossible in practice. This I cannot believe. I think that in a country like ours, enjoying all the standards of material affluence such as have never been enjoyed before in the whole of its history, this sort of Clause—may I say this in reference to the reply which the Minister made earlier to an hon. Friend of mine—is not new in what it is trying to do. I have had other similar Clauses to which I cannot refer because it would be out of order, which have been tried again and again over the years and have always been met with rebuttal by the Treasury. Therefore, the principle of this new Clause is not new.
If in this very affluent, material age we cannot do something to show that we still recognise the value of these things spiritual and of these matters which are of the more serious side of life as distinct from the ephemeral things that we see today, we have much cause for shame. The solidity and future of our country does not depend upon our degree of affluence or our ever-heightening process of prosperity. It depends upon the proper balance between those things which pass from day to day and those things which endure and go to the very heart and root of man. I hope that if these new Clauses are not accepted by my hon. Friend on the Treasury Bench, he will openly say so. If he does not accept the principle, then at least we shall know where we stand, because we cannot accept the suggestion that this is too complicated a matter to be put into practice.

7.15 p.m.

Mr. W. R. van Straubenzee: This matter has been so precisely argued that any hon. Member who wants to support the argument does not need to take more than a moment of the time of the Committee.
There are two further considerations beyond those which have been adduced which might commend themselves to the Economic Secretary even if he asks us tonight for time to think further about it before another occasion. They are these.

I think that it could have been argued that in the fairly recent past the state of our charities was, to use a colloquial phrase, in a mess. But because of legislation recently enacted and now increasingly being brought into effect, we are witnessing an effective codifying of the many charities which we have and are learning a great deal about them which we did not know before. Therefore, this House of Commons has put the state of our charitable law in order and it may be that this will remove some possible anxiety which previous Treasury spokesmen might reasonably have felt.
The second reason that I give to my hon. Friend is this. I think that it is probably true to say that in all Churches there has hardly ever been a time when the financial burden associated with them has been more widely shared, or when there has been brought into practice—does the hon. Gentleman wish me to give way? Is there some controversy?

Mr. Arthur Lewis: The hon. Member is talking about the financial difficulties of some members of the Churches. There are also the difficulties of some hon. Members of the House, who have been sneered at and jeered at by the hon. Member.

Mr. van Straubenzee: The hon. Gentle man is quite wrong. I was not talking about the financial difficulties of the Churches. I was saying that there had never been a time, probably, in which the financial responsibility for the Churches had been more widely shared. The hon. Gentleman's interruption was not relevant.
In point of fact, there has never been a time when these responsibilities have been more widely shared. I am only seeking to say that very large numbers of members of individual Churches are now bearing financial burdens which they had not previously done by way of schemes of one sort and another, which means that they contribute, sometimes at very considerable cost, and burden themselves for the Church to which they belong.
I am only seeking to put before the Treasury Bench that this is a more developed state of affairs than it has probably ever been before. This I should have thought is a good social thing which


the State might very well and very reasonably bolster by way of its tax laws. it is for these two reasons, in support of the Clause so admirably moved by my hon. Friend, that I should like to hope that the Treasury Bench may feel able al least to give consideration to the arguments.

Mr. du Cann: We have listened to a very moving and eloquent plea by my hon. Friend the Member for Aberdeenshire, West (Mr. Hendry), ably supported by my hon. Friend, the Member for Bedfordshire, South (Mr. Cole) and my hon. Friend the Member for Wokingham (Mr. van Straubenzee). I agree with a great deal of what they said.
I agreed with my hon. Friend the Member for Aberdeenshire, West when he said there was great need for private help in spite of the Welfare State. Of course that is perfectly true. I agreed with my hon. Friend the Member for Bedfordshire, South, when he spoke of the importance of spiritual values, which again was a point brought out by my hon. Friend the Member for Aberdeenshire, West. I agreed also when my hon. Friend who moved Second Reading of new Clause 27 spoke of church needs. I think there is not an hon. Member who is not conscious of that problem and does not share my hon. Friend's concern. There are other matters about which we should be concerned, but none the less, that is a particularly important one.
I understand also the additional points which were made by my hon. Friend the Member for Wokingham. I applaud the enthusiasm with which my hon. Friend and his colleagues make these proposals, but I am sorry that I cannot agree with their judgment of the method we might perhaps adopt in order to do something about this very real problem. Most of the discussion has been about the churches, but these Clauses go very much wider. They refer also to charities, although we have not heard very much about charities in this debate.
We are considering three new Clauses. The first two are to give what one might call individual tax reliefs and the third is to give a tax relief to companies. All three are designed to do the same thing, to be more helpful to Churches and charities. I shall deal first with new Clause 27. This proposes to

introduce into Part VIII of the Income Tax Act, 1952, a new personal allowance. This would be given to any individual claimant who proved that during the year of assessment he had made donations to Churches and charities amounting in total to more than £10.
My hon. Friend the Member for Aberdeenshire, West asked in particular about United States practice. It is bad enough for me to have to answer for United Kingdom practice without having to answer for U.S. practices as well, but I call his attention to a short debate we had last night on a somewhat similar suggestion, which was made by the Opposition and in particular by the hon. Member for Stoke-on-Trent, Central (Dr. Stross). It was that we should be more liberal in tax concessions to those who may give some money to charities, with special reference to art galleries and museums.
In that debate we talked about United States practice and my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) was particularly eloquent on the subject. I hope that none of my hon. Friends will think that American practice in this regard is wholly desirable. I can assure the Committee that it is not. The United States revenue authorities are not altogether happy about it and my lion. Friend the Member for the Isle of Thanet said last night that the practice had become a racket. In my opinion, it would not be desirable to have it here.
Many schemes have been canvassed and suggestions made for helping Churches and charities. I do not doubt that my hon. Friend the Member for Aberdeenshire, West has in mind very much some of the suggestions canvassed in the newspapers by Sir Peter Macdonald. Some of these matters were discussed in another place a little time ago. My hon. Friend's proposal, however, differs substantially from the proposals made by Sir Peter Macdonald. My hon. Friend wants to go a very great deal further.
I wish to speak now of particular objections to variable tax relief for charitable contributions. The chief objection—in spite of what my hon. Friend said—is the very formidable administrative difficulty. That is sub-


stantial. I shall not particularise, but perhaps, as he seemed a little uncertain on the point, he will allow me to call attention to paragraphs 184 and 185 of the final Report of the Royal Commission which sets out the matter very clearly. One has only to think of the structure of the P.A.Y.E. system to realise that if we had a variable contribution it must inevitably cause substantial difficulties.
Even if that were not so, there are substantial objections to this proposal. The man who contributed £11 under new Clause 27 would get the allowance in full, but the man who contributed £10 would get no tax relief at all. I quite understand that my hon. Friend wants to encourage generous contributions and it is important that we should do that, but it seems unreasonable that the rich man should get the benefit of this tax concession while the widow with her mite should not. That seems inappropriate.
There are general objections to a tax allowance for contributions to charities. One sees them clearly when one remembers the present system of covenants to which another of the new Clauses is directed. As a matter of practice—a matter of fact, not of argument—the two systems could not run side by side. One would have to go. As the Royal Commission also said, it is very doubtful indeed that charities generally would benefit through a change-over from the present covenant scheme. That scheme is well established, it runs smoothly and, I believe, brings great benefits. I know that my hon. Friend wants to go further, but the present scheme brings benefits arid does work and we cannot have both schemes. It would be unfortunate if the covenant system were replaced by my hon. Friend's suggested system. He would in fact fail to achieve the very object he so anxiously and rightly desires.
My hon. Friend was of the opinion that the cost in relation to new Clause 27 would not be great, but that is not so. We estimate that it would be in the neighbourhood of £100 million per annum. Sir Peter Macdonald's proposals would be somewhat less expensive, perhaps £40 million. I think that my hon. Friend will agree that £100 million is a very substantial sum. I hope I have

said enough to convince my hon. Friend the Member for Bedfordshire, South that I am not trying, as he suggested I might, to produce ordinary Treasury arguments which have been given from this Box year after year. That is not the position. I share his aims, but I am simply not convinced that this is the right way to go about the matter.
I am not convinced that if we went about it in this way we would have the results which my hon. Friends and I urgently and equally desire. Perhaps I could remind them of the existing benefits to charities beyond the covenant system. Exemption of charities' income from tax costs about £50 million, including about £8 million repaid in respect of covenants. For all the need and desirability, it would be very hard to expect Parliament to say that in addition to this cost of £50 million per annum there should be the new cost of the order of £100 million.
Turning to new Clause 28, the aim, as my hon. Friend explained, is to restore Surtax relief to individuals paying from income to charities under seven-year deeds of covenant. The Committee will remember that the system was changed, as my hon. Friends have reminded us, in 1946. At that time new deeds of covenant were being entered into at the rate of 60,000 to 70,000 a year. I have no doubt that that rate of increase would itself have increased if this system had been maintained. My hon. Friend asked why we do not go back to that old system, but it has created difficulty over a very long period. My right hon. Friend the Member for Woodford (Sir W. Churchill)—whom it was such a pleasure to see in the Chamber again earlier this afternoon—was most anxious in 1927 to withdraw it, and 1927 is 36 years ago.
The Committee has to face the question of the degree to which it is appropriate for the State to add to individuals' contributions. At the moment it contributes 7s. 9d. It is less than when the standard rate was higher, but is it right to suggest that the State should contribute 17s. 9d. in every £? That would be going very far indeed and would be something which we could not lightly accept.

Mr. Cole: I interrupt my hon. Friend to point out an inconsistency. He has pointed out the difficulties about the covenant scheme, but a few moments ago


he said that it had worked well over the last few years. I did not suggest that 17s. 9d. should be paid, but said that that was the maximum. There are lower degrees of Surtax before one gets to 17s. 9d. in the £.

Mr. du Cann: My hon. Friend is slightly confusing two points. The covenant scheme as it exists operates satisfactorily. I defend it and think it a good thing. We have had arguments about it from both sides of the Committee earlier, but the system as it works now is satisfactory. If we had covenants for Surtax I do not believe it would be satisfactory, fair, or in the general interest. The contribution expected from the taxpayer would in general be too great. I am sorry that is so and I am sorry to disagree with my hon. Friend the Member for Aberdeenshire, West, but he invited me to give my view and I give it to him frankly.
7.30 p.m.
I cannot help feeling also that in regard to charitable matters, in spite of the argument advanced in favour of the richer people giving and being encouraged to give, it is perhaps better in the charities' own interests to encourage the widest possible spread of contribution. I am sure that this must be the way eventually to attempt to solve some of their problems. Even if that were not so, I think that my hon. Friend has failed to take into account the change which has been made in taxation in recent years. He talked about the reduction in the standard rate from 9s. to 7s. 9d., but he failed to mention the Surtax reliefs, which obviously put those better able to give into a better position to do so.
My hon. Friend said at the beginning of his speech that there is a need for giving, although we have a Welfare State. I have already said that I agree with him there. However, what he is recommending in these three Clauses, whether we give relief to individuals or to companies, is that the State should make an entirely indiscriminate contribution to charities of all sorts. My hon. Friend concentrates his attention on the Church; he is quite right to do so, but the effect would be to benefit every charity, whether that was a desirable thing to do in the national interest or not.
I cannot estimate the cost of the second

new Clause. One can look back at the figures ruling in 1946, but I think that probably the total cost would very soon build up to an extremely formidable figure. The cost of the third new Clause, the company Clause, would probably not be so great. My hon. Friend suggested £13 million. I think it would probably be £l2 million. Be that as it may, there is nothing to stop prosperous companies, if they wish, making charitable contributions today. Personally, I think that most companies have a special duty in this regard, but I am still not clear that it would be right to give them a special tax advantage for that purpose.

Mr. Houghton: The Economic Secretary keeps on saying that the State makes a contribution. Is the doctrine that if the State refrains from taxing a person that person is thereby receiving a contribution from the State?

Mr. du Cann: No, I do not think it is. I have long said that I intensely dislike the suggestion that, when the Chancellor allows people to keep more of their own money, he is in fact giving something away. That has never been my view and it will never be my view. I am a great believer in lower taxation, and I think that any Chancellor has a duty to aim at that if he possibly can.
To sum up, I have the greatest possible sympathy with the purposes of the new Clauses. I agree that there is need for private help. There is certainly need for spiritual reinforcement. I also understand my hon. Friend's very strong feelings. I must point out that help is given in various ways. I believe it to be good help. I believe it to be help which is entirely justifiable, but I think that there are substantial objections, both from the practical point of view and as a matter of principle, to the proposals which my hon. Friends have produced for our consideration tonight. I am grateful to them, none the less, for having produced them, because it is urgent and important to discuss these matters. However, I do not believe that their fiscal proposals are the real solution to the problem. I hope that in these circumstances my hon. Friends will not feel obliged to press the Clauses.

Question, That the Clause be read a Second time, put and negatived.

New Clause.—(RELIEF IN RESPECT OF SCHOOL FEES.)

The amount of relief specified in section 212 of the Income Tax Act 1952, as amended, shall be increased by the amount of the fees paid in respect of the education of the child at any educational establishment to a maximum of eighty pounds.—[Captain W. Elliot.]

Brought up, and read the First time.

Captain Walter Elliot: I beg to move, That the Clause be read a Second
time.

The Deputy-Chairman: With this new Clause No. 39 it will be convenient to take new Clause No. 50—Medical insurance.

Captain Elliot: This is not an original Clause. It has been discussed several times in the past. I do not want to dwell on the arguments that have been advanced, merely to get the same old answers. Conditions change and old arguments need re-examination. I want to touch on some of the main points. Our Welfare State was conceived by minds conditioned to the 1930s. Things are different in the 1960s and we have to take account of this. People today get benefits from the State even though they can afford to pay for them. Others do not get enough.
This happens in the education service. Free education is a great thing and it must be provided for everybody who needs it. It must be just as good as any other education service. Some people who could contribute more do not do it. They use the State education system and spend their money on other things. Others pay for the education of their children, many at great sacrifice. They hold that one of the best ways to spend their money is in the education of their own children, and I agree with them. The purpose of the new Clause is to encourage people to do that.
I want here to refer to what I think is a Treasury argument—the principle that the State taxes people and that the people can do what they like with the income that is left. It must be admitted that so many special concessions have been given that that argument no longer holds. I mention life assurance as one example. It is considered desirable that people should insure their lives and in that manner provide for their dependants if they are killed, or have the money later

—after, say, 20 years. This is considered desirable, so tax concessions are given for it. Some people are wealthy enough to do without assistance towards education. If the Clause is accepted in principle, it could be worded to cover only those who need help.
Basically, the question is whether there should be another education system in addition to the State system. I do not believe that the argument here is entirely on party lines. I would not say for a moment that there is not substance in the argument advanced against two education systems. As with many other issues, we have to decide if the advantages outweigh the disadvantages. There are disadvantages in having a free Press, but we believe that the advantages outweigh the disadvantages.
It is argued that, if resources are diverted from the State system, the State system suffers. It is also argued that it is unjust that those who can afford to pay can get better opportunities for their children. I believe that that argument is now much weakened and is getting weaker. Many State schools provide as good or better an education as fee-paying schools, although I freely admit that many do not. I believe that the main difference between the two systems is the greater variety in the fee-paying schools and, because of this, parents will, if they can, send their children there, however good the State system is. I do not believe that the State system will ever provide the variety needed. Inherently, a State system is uniform. I am very glad that people are willing to pay for the education of their children, to pay for a different system, if that is what they want. An alternative system is a great safeguard against encroachments by the enormously powerful State machine.
It is argued that fee-paying schools foster a class division in the nation. In the past I have agreed with this view, and even today it probably has this effect up to a certain age. After the late teens and in the early twenties the classes are so inextricably mixed up, certainly in the great mass of the population, that I do not believe that primary or secondary education today can be said, by and large, to have that effect. There is a division, but it is between those who have the advantage of higher education


and those who do not—those who attend universities, higher technical colleges and so on and those who do not—and we have no hesitation in subsidising those taking higher education.
I do not want to base my real case for helping parents on this sort of argument. My main point is this. We are all concerned with delinquency among children and adolescents—and we are alarmed on occasions by their wild indiscipline and loose behaviour. We blame the parents. People are always lecturing parents about how they should bring up their children and, no doubt, the responsibilities of parents are very great.
If parents cannot or will not guide or mould their children the State must try to do it for them, but it is a poor second best way if the State is called in. When parents fail it is often a great tragedy, since the vast majority act to the best of their ability for the good of their children. Parents today have a hard road to travel, for they must battle against constant pressure directed at children through the communications media; programrnes on television, books, plays and films masquerading under some high-sounding motives but, in fact, largely for commercial purposes appealing to and fostering a loose mode of living.
This is having a serious effect. Parents are fighting a losing battle against this onslaught. Many are giving up the struggle. I am sure that a number of hon. Members have received letters from schoolmasters asking, "Does not the parent take any responsibility?" I have received such letters. These are the reasons why our detention centres and other establishments are filled as soon as we build them, and why the queues at the clinics are getting longer.
Then we have the Welfare State. I hasten to say that I am not likening that to the sort of things I have been describing. The Welfare State has done great things, but it has its defects, and one is that it has steadily assumed greater responsibilities for our children and has tended to undermine the position of the parent. I have believed this for a long time and a few days ago I got some unexpected confirmation of this view. This came in an article in the Guardian on 20th May. In it the President of the National Association of Probation Officers was stated to have said that

The Welfare State was tending to erode the responsibility of parents by providing services which ought to be family duties…
The report continued:
The extension of State functions into the fields of health and welfare—admirable and desirable as they all may be—had nevertheless, to some extent, taken away the responsibilities of the family…One had every sympathy with the parent of today … for the conditions in which they brought up their children differed greatly from those of their own upbringing".
In the Daily Telegraph today—and similar articles appear in other newspapers—is the following paragraph concerning Mr. H. J. Rutherford, Chief Constable of Surrey. The newspaper states:
Mr. Rutherford said that since 1955 something ghastly had happened and crime was going up every year. Every year broke a new record. What had gone wrong with the community?
He was still greatly disturbed by the appalling crime figures 'I don't think very much more can be done in our prisons. I think the change must come in the homes and in the schools.'
I particularly think that that is so in the homes and—

7.45 p.m.

The Deputy-Chairman: Order. I do not want to interrupt the hon. Member in the midst of his argument, but I think that he is getting somewhat far from the Clause, which merely deals with the relief of taxation in respect of school fees. I think that the hon. Member is getting a little wide of the subject.

Captain Elliot: I apologise if I was getting wide of the point, Sir Robert. I was seeking to show the sort of thing that is undermining the authority of parents. I had intended to go on to suggest a method by which we could begin to reinforce that authority. In any case, Sir Robert, I had concluded that point of my argument.
If what I have said and the remarks I have quoted are true, what are we to do about it? Are we going to ignore the erosion of parental authority? We cannot do that; and my hon. Friend the Financial Secretary is in a position of responsibility and able to do something about it. Control of the purse strings is an effective way of controlling children, and more and more this sanction, as well as others, is being wielded by the State. The State takes our money and spends it for us, for example on education.
There are several good reasons why the Financial Secretary should accept the new Clause. I will give him only one, but it is a particularly good one. It would begin the process necessary to check the erosion of family stability. It would do this by strengthening the position of the parent and encouraging parental responsibility. The cost would be infinitely less than all the corrective measures required as a result of the weakening of parental control.

Mr. John Hall: We are discussing the new Clause entitled "Medical insurance" with the one to which my hon. Friend the Member for Carshalton (Captain W. Elliot) addressed his remarks. Last year, the Chair, in its wisdom, chose to select for discussion these two very similarly phrased new Clauses on education and medical insurances together: I could not at that time see a very close connection between the two and I still find it a little difficult to understand the connection.
Nevertheless, I must accept the decision of the Chair. I had hoped that on this occasion the Clause on medical expenses might have been taken first instead of second—instead of being left behind as it was last year. I had hoped that that would be so because, unfortunately, when it fell to the lot of the Minister to respond and to give his verdict on the two Clauses last year he had time to make only a passing reference to the one on medical expenses. Because of the lack of time he was not able to advance convincing arguments against it. Nevertheless, of course, the Clause had to fall.
Maybe the Minister devoted so much time to the consideration of the Clause on education because he foresaw the shape of things to come. I do not know, but I hope that when my hon. Friend responds this time he will devote more of his speech to the arguments in favour of my Clause, which is identical in wording to the one I tabled last year—which means that it is as indifferently phrased as last year's, although its meaning is quite clear.
The new Clause on medical expenses is designed to allow the taxpayer to claim relief in respect of a premium he may pay to cover the expenses of himself and his family incurred through illness. The figure of £15 I have inserted in the

Clause has no particular meaning. It could be a little less or more, but it is to the principle that I wish to direct my arguments.
I am heartened by the support I have had since last year from a very influential committee, the Porritt Committee, composed of representatives from all the medical and surgical societies and organisations in Great Britain—in which I include Scotland—which has produced A Review of the Medical Services in Great Britain. In the section on private practice the Committee says:
…we attach great importance to preserving and encouraging private practice, for we are convinced of its value both to the public and to medicine itself".
The Committee goes on to explain why it believes that the retention of private practice is important for the nation as a whole. It draws attention to the problems of pay-beds in hospitals, and states:
We are convinced that the official attitude to pay-beds is misconceived and unfair. In our view, any patient who chooses to be treated privately in hospital should receive some financial recognition of the fact that he is saving the Service the cost of an ordinary hospital bed".
It goes on, in a similar reference, to the question of drugs for private patients, which it regards as a very serious deterrent to the development of private practice.
In the final paragraph the Committee examines the ways by which private practice could be stimulated and states that one way would be
by giving financial encouragement to schemes for private insurance against the cost of medical care, both in general practice and for hospital treatment.…We recommend, therefore, that contributions paid by patients to provident schemes for the provision of medical care should be regarded as allowable deductions against income in the assessment for tax".
I think that hon. Members, looking at the list of well-known persons in the medical world which make up the Porritt Committee, are bound to take note of recommendations from such a source. It was not within the responsibility of the Porrittt Committee to estimate the cost of such proposals and it is not at all easy to get at figures. The nearest I can make it out to be is that the cost, gross, would probably be less than £2 million in a full year; and the net figure might well be very much less.
I say that the net figure might well be less because there would, according to the Porritt Report, be a lessening of demand on the National Health Service which would contribute to a general reduction in the costs of the Service. I am certain that, were he present, the Minister of Health would not necessarily agree with that. But, nevertheless, it is the considered view of a very reasonable and very high-powered Committee drawn entirely from the medical world. It may well he, therefore, that this type of tax concession, instead of adding to the costs of the Treasury, would do that very rare thing, and result in a long-term saving to the Treasury. I commend the Clause for that if for no other reason, because it is so unusual that a tax concession of this kind could result in saving to the Treasury.
Last year, in replying to the debate, the Minister, in his brief reference to the Clause I then tabled, said that he could not accept it because it was inevitable that the proposal would go further. I must confess that that struck me as a most extraordinary argument. Every time a tax concession is made, if it happens to be a reduction in the standard rate or in Purchase Tax, or a new tax allowance, one could say about them all that they may well go further; that next year someone will come along with a further demand to increase the concession which was made during the previous year, and so on. It seems to me an odd argument to advance against a Clause of this kind.
For the rest, my right hon. Friend stated that the arguments which he had used against accepting a Clause moved by my hon. and gallant Friend the Member for Carshalton relating to education applied equally well to the Clause dealing with medical expenses. On listening to what was said by my right hon. Friend, and later reading the OFFICIAL REPORT, I found it very difficult to see how the arguments deployed could be used. The only argument which I concede might possibly remotely apply was that the Minister rested most of his case on the principle that Income Tax personal allowances do not take into account what a taxpayer actually spends on current goods and services. I am paraphrasing what he said and what is reported in column 349 of the OFFICIAL REPORT of 5th June, 1962.
That is an argument, although it is only one, which I think would apply to the Clause, but I found it impossible to accept. In fact, many of the allowances given for insurance premiums, on life policies for example, relate exactly to the amount that the taxpayer pays. They do not relate to anything else, and I cannot see why there is any argument against a premium on medical insurance on the grounds that under normal conditions Income Tax allowances do not relate to the amount which the taxpayer pays for current goods and services.

Mr. Percy Browne: I think that my hon. Friend the Member for Wycombe (Mr. John Hall) is a little confused. The difference is that in the case of life insurance premiums there is no alternative provision by the State.

Mr. Hall: That is perfectly true—

Mr. R. H. Turton: There is a death grant.

Mr. Hall: My right hon. Friend has come to my rescue.
Even allowing for that fact, the words used by my right hon. Friend when replying the debate last year were:
Income Tax personal allowances do not take account of what the taxpayer actually spends on current goods and services. I believe that to be an important principle."—[OFFICIAL REPORT, 5th Tune, 1962; Vol. 661, c. 349.]
When a person pays for insurance on life, he is paying a specific amount related to a specific sum which his estate will receive upon his death. The tax relief is related to something for which he is receiving a service.
I do not think that hon. Members opposite would oppose this Clause, or that it will not have a favourable reception, because I assume that otherwise there would be a large number of hon. Members opposite who would be ready to oppose it. However, faintly pursuing, I ask the Minister to give this matter serious consideration. I expressed the hope last year that if this could not be done then, it might be done the following year, that is, this year. That is a process which might go on indefinitely until everybody falters. But I know that an increasing number of people are beginning to demand what is elementary social justice and therefore I hope that my hon.


Friend will spare time to deal with this Clause as well as the Clause which was moved so admirably by my hon. and gallant Friend the Member for Carshalton.

Mr. P. Browne: As was said by my hon. Friend the Member for Wycombe (Mr. John Hall), we are back on the same treadmill as last year. I have not looked up what I said on that occasion. But I wish to oppose both of these Clauses and I hope that the Minister will do the same.
The Conservative Party believes in equality of opportunity—even though it may not be sometimes apparent when my hon. Friends introduce Clauses of this kind. It seems to me that the State provides the means of educating one's children and the provision is there if one wishes to use it. If one does not wish to do so, and is prepared to spend income on educating one's children privately, that must be budgeted for in the same way as the purchase of a new car.
I reject the arguments that there should be a tax relief on the cost of educating children because if they were not educated in a private establishment there would be an extra burden on the taxpayer. I believe that if that argument is pursued—I do not suggest that it should be—the other side of the argument is that the reason people send their children to private establishments to be educated is the teacher-pupil ratio.
8.0 p.m.
If we were to abolish all forms of private education we should have a better teacher-pupil ratio in the State schools. I do not suggest that we should go to this length, because I believe that people have the right to educate their children as they wish, but it is quite wrong to suggest that there should be tax relief for this purpose.
The second reason with which my hon. Friend the Member for Wycombe made great play was the answer given by the present Minister of Education in a debate similar to this last year, but my hon. Friend did not complete what the Minister said. My right hon. Friend added that we did not subsidise or give relief on expenditure from net personal income where there was an alternative provided by the State. This is so with education and it is so with the death

grant, which was a mere red herring introduced by my right hon. Friend the Member for Thirsk and Malton (Mr. Turton).

Mr. John Hall: Surely my hon. Friend is wrong. The State provides a pension on retirement, but it is also possible to obtain tax relief on a personal pension.

Mr. Browne: That is perfectly true, but in the case of education and health there is no reason why a person's net income should be relieved in any way where the State provides an alternative. If somebody can go outside and obtain a better pension he can opt out of the State scheme, but he is bound to be in a scheme which the State says is sufficiently adequate. I believe that what the Minister said last year was perfectly fair comment, but, as I said earlier, I base my main argument on the fact that the State provides a system of education which is improving all the time, thanks to the Conservative Government, and if people sent their children to these schools it would have exactly the reverse effect of what my hon. and gallant Friend the Member for Carshalton (Captain W. Elliot) suggested—that we should expect generally that the more educated people would send their children to private schools.
If they sent them to the State schools they would find that the level of behaviour in those schools would rise, because one is apt to find that the more responsible sort of parents send a child to a fee-paying school.

Mr. Dudley Smith: I should like to support the new Clause in the name of my hon. and gallant Friend the Member for Carshalton (Captain Elliot) and at the same time support the one in the name of my hon. Friend the Member for Wycombe (Mr. John Hall), although I do not intend to go into the merits of these arguments. Some of the points put by my hon. Friend the Member for Torrington (Mr. P. Browne) are quite persuasive on their face value, but even so I agree with my hon. and gallant Friend the Member for Carshalton when he says that the State is never likely to provide the complete variety of education needed in this country. There always will be a place for independent education, whatever State system we have.

Mr. P. Browne: I did not say that there was not. All I said was that there should not be any tax relief if one sent one's children to an independent school.

Mr. Smith: I will come to that, There are strong feelings on this subject among many people outside this Committee, not only among people who have children at school but among those who intend eventually to send their children to fee-paying schools. There is also quite a body of support coming from people who have children in the State system and who would not begrudge some sort of relief in this direction. We must not forget that only a small number of people affected are rich. The large number are probably hard up or struggling along on middle-class incomes. I know that this is their choice, but these are people who are trying to make great sacrifices to educate their children privately and they face inflation in school fees. It is almost impossible to send a child to any of the great, reputable public schools for under £500 a year. This creates a great deal of trouble among the people concerned.
I have felt for a long time that there is a case for some form of tax relief. Obviously it would not be right to give full relief, but there is a place for some gesture. If all the people who educate their children voluntarily opted out and sent the children into the State system chaos would result, just as chaos would result if those who were entitled to the full amount of rebate on Schedule A put in their claims.
I have always thought that some gesture will have to be made in this direction if we are to retain a varied system of education. I know the arguments advanced by my hon. Friend the Member for Torrington. I know that the figure involved even in the quite modest claim put by my hon. Friend the Member for Wycombe is still a vast sum. Even so, it is a principle well worth establishing and if we made a small gesture there could be great benefit as a result.

Mr. Hirst: I do not know whether I should be supporting both Clauses and I certainly would not be speaking again this evening if it were not for the quite dreadful speech of my right hon. Friend the Member for Torrington (Mr. P. Browne). There are times when I find

myself in league with him, not always to the benefit, or so it seems, of the Treasury Bench, but this is not, one of them by a long way. My hon. Friend had it all wrong. Quite seriously, I believe that it is highly desirable that one should try and make provision for oneself in addition to anything that the State may do. This is the basis of life assurance. We should encourage people to make provisions for themselves and not remain entirely a burden on the State. The hon. Member for Cardiff, South-East (Mr. Callaghan), peculiar though some of his views are, some of which I share—

Mr. James Callaghan: The question is whether there should be tax relief when one makes the choice.

Mr. Hirst: Of course there should be. That is an encouragement to make it highly desirable for people to make provision for themselves. That is the basis of life assurance. I support both Clauses and if I were to draw a distinction I would support the one in the name of my hon. Friend the Member for Wycombe (Mr. John Hall) slightly more than the other one because, as my hon. Friend knows, we have shared the view for many years that it is highly desirable, for example, that every facility should be given to the maintenance of freedom in medicine. There are many first-class reasons for that firm belief. It is obvious to me that if people do something materially to help themselves, and incidentally at the same time to help the State in various ways, it is fit and proper that the House of Commons should give them encouragement.

Mr. Callaghan: Why?

Mr. Hirst: I will tell the hon. Member. I assure him that I did not have to go to a weekend course for this, but I do not want to be rude to the hon. Member, because we are quite good friends apart from sitting on opposite sides of the Committee.
At present if, for argument's sake, everybody transferred their children from fee-paying schools and placed all those children at once as burdens on the State the situation would be catastrophic and would remain so for many years to come. Therefore, there is a jolly good State reason why relief should be given.


Nobody, of course, believes that there should be relief on all the expenditure. It would be quite easy to suggest some criterion, such as relief on the equivalent of what roughly would be the cost per head of secondary education. I do not know that anyone suggests that there should be relief to the extent of sending a child to any chosen school. The relief should be in relation to the cost which the State would otherwise incur if the child went to a State school. I cannot see that my hon. Friend the Member for Torrington could have arrived at his view other than from prejudice.

Mr. P. Browne: Principle rather than prejudice.

Mr. Hirst: In which case my hon. Friend's principle is rather worse than his prejudice.
Obviously on the Clause on the Order Paper dealing with medical insurance the same thing applies. The subjects are totally different, but clearly the object of the exercise is the same, which is that people should be helped to do something of assistance to themselves and the State. This is a partnership. If it were entirely a matter of assistance to themselves alone it would be difficult to argue the case and it would be a prejudice which I would not support. But if there is a bracket—as, indeed, there is—between self-interest and fundamental help to the State, then it is right that people in that bracket should get relief to the extent that they are helping the State.
I know that my hon. Friend the Financial Secretary is itching to tell us what he thinks, in that charming way of his. We do not get dusty answers this year. This is the first Finance Bill Committee stage that I have attended in which we have not had dusty answers. We get nice answers, but they are not very effective.

Mr. Turton: I want to add a word to the remarks made by my hon. and gallant Friend the Member for Carshalton (Captain W. Elliot) in a very able speech on education. I feel that the country is in a dilemma. About 250,000 children are being educated in 3,000 independent schools which are recognised by the Ministry of Education. The Front Bench opposite, in Signposts for the Sixties, expresses a desire to abolish the independent schools.

Mr. Callaghan: Where does it say that?

Mr. Turton: In Signposts for the Sixties.

Mr. Callaghan: No.

Mr. Turton: I hope that the hon. Gentleman will explain what his policy is for the independent schools.

Mr. Callaghan: It would be out of order if I were to do that on this Clause. It is up to the right hon. Gentleman to justify a quotation which does not exist.

Mr. Turton: It is well recorded in the evening papers today what is said in Signposts for the Sixties. So far as I can see, it is a perfectly clear quotation.

Mr. Callaghan: As I have insisted that that quotation does not exist, and it is untrue to say that it does, surely the right hon. Gentleman should withdraw his suggestion.

Mr. Turton: Anybody reading that document will find such a bias against independent schools that they would draw the conclusion that hon. Members opposite do not wish them to survive. That is quite an understandable attitude. There is also the other attitude of the hon. Gentleman the Member for Torrington (Mr. P. Browne), which I would call a plutocratic argument—that the independent schools should be a perquisite of children with very rich parents who can pay the large fees out of capital.
I support this Clause because I believe that independent schools have quite a different function to fulfil from the function of other schools. The child who attends an independent school is, in most cases, not a child of very rich parents. Those parents believe that by sending their children to an independent school they can give their children that form of religious background which they think right.

Mr. P. Browne: Will my right hon. allow me to interrupt?

Mr. Turton: Not yet.
In the 1944 Act there is a certain agreed syllabus of education. Many of these independent schools try to give


a particular religious background which many parents think important for their children.
Secondly, there are many parents who have to change their homes because of their occupations. There is the example of the Services, members of which often do not know what station they will be sent to and, therefore, they have to send their children to independent schools. They are not well off. In the vast majority of these 3,000 independent schools we find children of such parents.
There is at the moment a tremendous drive to get these independent schools structurally sound and provided with all the facilities that we as taxpayers provide for the State schools. Therefore, parents are today paying much larger contributions in order to modernise independent schools and, at the same time, they are making their contribution as taxpayers to the State schools.
I think that it was Lord Eccles, when he was Minister of Education, who worked out that it cost to educate a child below 11 £90 a year and a child over 11 £150 a year. My hon. and gallant Friend, therefore, has suggested that tax relief should be limited to £80 a year, which means granting relief at a maximum of £31 a year in tax.
I commend this Clause. I believe that it helps not the very rich, not the sort of man who is paying large sums to an expensive public school, but the small man who is sending his child to a small independent school and who, at present, finds it very hard to carry on.
8.15 p.m.
If we are to have a policy for the social services in the 1970s, clearly, we shall not only have to make provision for good social services for everybody, but also provide the opportunity for people to get that little bit extra, whether it is a religious background or a better pupil-teacher ratio. We are asking that the taxation of such people should be relieved to a very limited extent in order to encourage these independent schools, and I believe it is vitally important for the future of the country that we should tackle this problem in some such way as this.

Mr. P. Browne: I am grateful to my right hon. Friend for giving way. I hope that he will notice that I have done him the courtesy of calling him my "right hon. Friend" and not "the hon. Gentleman", as he called me. I should like to know whether he agrees that many of us, including myself, who have children at fee-paying schools are caught up in a vicious circle. We have no plutocratic ideas. We feel that we ought to send our children to good State schools, of which there are many in this country, and yet fear that we should not do so because of our backgrounds. I myself went to a public school and I feel that perhaps my children should go to the same sort of school as the people with whom they have rubbed shoulders before they went to school. This is true of many of us.

Mr. Turton: I must apologise to my hon. Friend. I did not realise that I had lapsed when I used the word "Gentleman" and not "Friend". He is both a gentleman and a friend.
I am not really thinking of this problem as it affects the ex-public school man who wants to send his child to a public school. Such people form a small minority of the 250,000. What the Committee does not seem to realise is that the independent school system is much wider than many hon. Members say it is. I know many such schools in which the pupils are children of shopkeepers, plumbers and foremen, and they are the people on whom the burden of taxation falls hardest.
I hope that if my hon. Friend the Financial Secretary cannot give relief in the form of this proposed Clause this year, he will consider in what way the Government can help these independent school to carry on, if the Government wish them to carry on, as I know it is the wish of the Minister of Education that they should continue to do their work efficiently.

Mr. Anthony Crosland: This is a proposed new Clause on which, as last year, the Conservative Party presents this incredibly reactionary view. Some of the speeches have been so fantastic that they would have shocked not merely hon. Members on this side of the Committee, but half the younger element of the Conservative


Party, who are represented by the hon. Member for Torrington (Mr. P. Browne).
The "old soldier", as the hon. Member for Shipley (Mr. Hirst) called himself, talked about week-end courses. I must say that a number of hon. Members opposite badly need a week-end refresher course of education in the independent school system because some of the factual inaccuracies that we have heard are really grotesque. The right hon. Member for Thirsk and Malton (Mr. Turton) said that, according to Signposts for the Sixties, the Labour Party proposes to abolish the independent schools. I do not know what the right Parliamentary expression is. I know what I would call that remark if it were made outside the House and I were not subject to Parliamentary rules.
I am sure that the right hon. Member did not know that it was a total inaccuracy, though he should have done. What the Labour Party says in Signposts for the Sixties is almost identical with what one of our most eminent independent school headmasters, the headmaster of Marlborough, said, namely, that the Government should set up an educational trust which, in voluntary co-operation with the independent schools, would consider various ways in which their future could be altered. I commend a recent book written by the headmaster of Marlborough in which he considers a number of possible reforms, and in the end comes to a proposition very near to that which appears in Signposts for the Sixties.
I want to consider one or two implications of this Clause. The Clause would involve a tax subsidy, a tax rebate—call it what one likes—to roughly 7 or 8 per cent. of the population. That is the percentage of people now taking advantage of private education.
Despite what hon. Members opposite have said about the impoverished professional classes, by far the greater part of this section of the population is extremely well off. Incidentally, if the professional classes are as badly off as all that after twelve years of Tory rule, I do not know what Ministers have been congratulating themselves about. I am glad that the Minister of Education has come in. At least, I have acquired another supporter from the younger sec-

tion of the Tory Party. There are now two Members on the opposite benches who have taken a slightly more liberal view.
As I say, this would mean a tax subsidy to the wealthier 6, 7 or 8 per cent. of the population who really should not be so badly off after twelve years of Tory rule. It would be a tax subsidy to people whose children, as it is, will derive immense benefit of having been to the independent schools. They will have the benefit, as the hon. Member for Torrington rightly said, of having smaller classes. It would be a tax benefit to a group of people who voluntarily choose to spend their money in this way on behalf of their children. I am not objecting to their doing so. I simply say that it does not constitute a reason for the giving of a tax benefit.
The hon. and gallant Member for Carshalton (Captain W. Elliot) produced some arguments which I have not heard for ten or fifteen years. I do not know what kind of life he lives in Carshalton. One gets a quite incredible picture of the kind of people with whom he mixes and the sort of conversations he has if he really believes that more and more of our money is being spent by the Government for the purposes he mentioned, that family life is being sapped, and so on. One used to hear this sort of thing in 1951; I did not know that it was still being said. It is like the old tale about coals in the bath. I thought that it had all gone some years ago.

Captain W. Elliot: The hon. Gentleman cannot possibly have heard what I was saying. I quoted the President of the National Association of Probation Officers and the Chief Constable of Surrey. They were not my observations, but theirs. They just happened to have come out during the past week.

Mr. Crosland: I listened with rapt attention, and in some disbelief, to what the hon. and gallant Gentleman was saying and what he told us the Chief Constable of Surrey had recently said. Apparently, the Chief Constable has said that, in 1955, something ghastly happened and that our crime rate started to soar. This could be due to all manner of causes. but it certainly cannot be due to the Welfare State. The Chancellor of the Exchequer has, no doubt, many historic


achievements to his credit, but no one could say that he had enormously increased expenditure on the Welfare State since 1955.
The idea that more and more of our money is being spent by the Government is quite absurd. Until a year or two ago, the Government—

The Temporary Chairman (Sir Norman Hulbert): Order. The hon. Gentleman is now straying very far from the Clause.

Mr. Crosland: You are rather harsher on me, Sir Norman, than your predecessor in the Chair was on the hon. and gallant Member for Carshalton. Your Ruling has excluded some of the replies which I wanted to make to him.
Perhaps, on the question of what was said by the Chief Constable of Surrey and similar observations, I may say this. It is closely relevant to the new Clause. In this country and all over the world there has not been a breakdown of family life. There is no evidence of it. It may be the case in parts of Carshalton, but, over the country as a whole, there is no evidence of a breakdown of family life.

Captain Elliot: I must protest at the way the hon. Gentleman constantly picks out Carshalton. My first quotation was an extract from a speech of the President of the National Association of Probation Officers. It had nothing to do with Carshalton; it related to the country at large.

Mr. Crosland: I apologise for picking out Carshalton. However, despite what may have been said by this eminent probation officer, I simply cannot believe that these views are held anywhere in the country outside Carshalton.
Of course, juvenile delinquency has increased, but I insist that there is no evidence for the suggestion that family life is loosening or breaking down in the way suggested. Undoubtedly, juvenile delinquency has increased in this country, and all these terrible things started happening in 1955, but what has this to do with private education? Nothing whatever. There has been no change in the trend as between public and private education since 1955. We have a problem of juvenile delinquency, but it has nothing to do with our education system. It is a problem which exists

equally in the United States of America, the Soviet Union, Japan and in every country of Western Europe.
I have no idea what the reason is for this sudden outbreak of juvenile delinquency. In my view, nobody knows definitely what the reason is. What one can say definitely is that it has nothing to do with the balance between private and public education in this country. It is a problem common to every advanced industrial country.
Next, the hon. and gallant Gentleman and one or two other hon. Members suggested that the new Clause had something to do with whether there should be a private education system at all. It has nothing to do with that, either. It has to do with the question whether the private education system should or should not be subsidised by the State. We are not arguing the case for or against the private education system. We are arguing only about whether or not the Government should help it, which is quite different.
If we were arguing the question whether we should have a private education system or not, I should differ strongly from some of the views expressed by the hon. and gallant Member. He said that the system as it now operated did not lead to class divisions of any kind. On this issue, I much prefer the more realistic views of the headmaster of Marlborough, as expressed in his recent book, and the well known views of the headmaster of Eton, who is about to go off to South Africa.
The hon. and gallant Gentleman said that there would be chaos if all the parents who now sent their children to the private schools sent them to the State schools, indicating that they were somehow doing a service by sending them to private schools. Whatever we might do in the course of the next year or two, the huge majority of them will continue to send their children to the private schools. In any case, if some of these parents did send their children to the State schools, the consequences for the whole State system would be excellent. A great deal more interest would be taken in it. This is not a wicked Socialist opinion. It is very much what was said by Lord Eccles a little while ago, when he advised a meeting of Conservatives—of Conservative women, I think it was—that they


would be doing a good thing if they all sent their children, at least at the preparatory stage, to the State schools.
The "old soldier"—if I may call the hon. Member for Shipley that—in his old comrade's manner, said that it was very important that we should have self-help. It is important. We are all disciples of Samuel Smiles. Let us have the country full of self-help. But if we believe that this sentiment should be encouraged, and we are so anxious that people should help themselves, why should they be offered a subsidy to help themselves? Let them help themselves on their own, without the benefit of tax concessions, if they are such sturdy citizens.
The most extraordinary argument was the one the right hon. Member for Thirsk and Malton produced last year also, that as these taxpayers, by sending their children to private schools, are relieving the community of a burden on public education, we should, therefore, help thorn by a tax rebate. How far is one to extend this argument? Are we to give a tax concession to all healthy people because, by not being ill, they relieve us of a burden on the Health Service? Are we to give a tax rebate to all employed people because, by being employed, they relieve us of the burden of having to pay unemployment benefit? Should we give a tax concession to all private motorists on the ground that, since they own cars, they are diminishing the railway subsidy?

Mr. Hirst: Nonsense.

Mr. Crosland: I am sorry, but this is exactly the argument which follows by analogy, with precisely the same degree of illogicality. So one can go on with the arguments, though I shall not weary the Committee by doing so.
I mention one more point made by the right hon. Member for Thirsk and Malton, who spoke of the children of serving officers abroad, diplomats and the like. Of course, this is a real problem. However, when the right hon. Gentleman said that the public schools were at present mostly filled with the children of people serving abroad, he was wrong. There is only a very small proportion today—

Mr. Turton: I spoke of the independent schools. I said that the public schools

were a different matter. The hon. Gentleman has twice misquoted me.

Mr. Crosland: It is certainly not true that the bulk of the school population of the independent schools consists of children whose parents are abroad. The huge majority consists of children whose parents are at home. However, there is a problem here, of course, although it is not one which necessitates people going to independent schools. For a number of years, we have had some very distinguished boarding schools in the public education system. The London County Council school is a very well-known example. The number is growing now, and it is quite possible to find boarding school accommodation within the State sector.
As to religious education, again, no one objects in the slightest to a parent choosing an independent school because there is a stronger religious element in the education. All that we are saying is that this does not constitute a reason for a tax rebate to them. This is a perfectly free choice that people should make with regard to their taxable income. As I have said, it is staggering, and, I suppose, encouraging to us in a sense that this kind of new Clause should still be moved by members of the Conservative Party. It goes counter to a recent Bow Group pamphlet on the public schools and to a Motion moved about two years ago by the hon. Member for Lowestoft (Mr. Prior) on private schools. It certainly goes counter to everything that the Minister of Education thinks, as well as to the views of the hon. Member for Torrington. The old soldiers never change, and I suppose that that is something to be thankful for in a world apparently full of modernisation and radical change. We have no sympathy whatsoever with the new Clause. any more than I suspect the Financial Secretary will have.

8.30 p.m.

Mr. Barber: With all due respect to my hon. Friend the Member for Wycombe (Mr. John Hall), I think that these two new Clauses are conveniently discussed together because they both raise the same point of principle or prejudice.

Mr. John Hall: Before my hon. Friend deals with my new Clause entitled "Medical insurance" I hope that he


will take note that the official spokesmen for the Opposition were unable to advance any argument against it.

Mr. Barber: I turn, first, to the new Clause in the name of my hon. and gallant Friend the Member for Carshalton (Captain W. Elliot)—"Relief in respect of school fees". His proposal is to give an allowance over and above the ordinary child allowance which is now to be increased, and the additional allowance would be in respect of fees paid for a child's education. It would be £80 or the amount of the fees, whichever was the less. Therefore, on the face of it, it is a moderate proposal.
The new Clause in the name of my hon. Friend the Member for Wycombe would allow a deduction for tax purposes of sums paid to obtain insurance against medical expenses, and again there is a maximum limit of £15. My hon. Friend explained the details of his proposal, so I need not dwell on them.
The debate has been remarkable for one other fact, and that is the pleasure which I an sure we all feel in seeing my right hon. Friend the Minister of Education back again on the Committee stage of the Finance Bill. The hon. Member for Grimsby (Mr. Crosland) referred to an observation made by Lord Eccles some time ago about the desirability of more professional people sending their children to State schools. He will know—and I think it right for me to say this in the presence of my right hon. Friend—that the present Minister of Education takes precisely the same view, and I think that it is held by most people who think deeply about education.
As the Committee knows, proposals on much the same lines as those of the new Clauses have been considered by this Committee on a number of occasions in the past. Indeed, almost identical Clauses were discussed only last year. The view of my right hon. Friend on these matters does not differ from that of his predecessor or my hon. Friend the Member for Torrington (Mr. P. Browne). Incidentally, I hope that my hon. Friend will again be good friends with "the old soldier", my hon. Friend the Member for Shipley (Mr. Hirst). I should hate there to be any serious differences of opinion between them on this the last day of our Committee stage.
It is true that my hon. Friend the Member for Brentford and Chiswick (Mr. Dudley Smith) said that many parents make considerable sacrifices to send their children to private schools. Indeed, a number of members of the Opposition are doing just that, and it is certainly not for me to question their reasons. I accept, as must any sensible person, that there are circumstances which may make it desirable, and, indeed, sometimes almost a necessity, to send a child to a private school. There may be compelling religious reasons for it. The parents may be abroad or travelling round a good deal. They may take the view that a particular private school provides in a locality a better education than the available State school, although that is by no means always the case. But, whatever the reason, we on this side at least are unanimous in believing that a parent should be free to send his child either to a private school or to a State school as he pleases.
On the point made by my right hon. Friend the Member for Thirsk and Malton (Mr. Turton), I certainly have the clear impression that the Leader of the Opposition, once again, has been attempting to slide out of his party's declared policy by trying to curry favour all round and to satisfy all shades of divergent opinion. It simply will not do. I agree with my right hon. Friend. As I understand it, the declared purpose of the Labour Party is to integrate the independent schools into the State system, and the Leader of the Opposition and no one else in this Committee can wriggle out of that. We should be clear where we stand on it.
On the new Clause in the name of my hon. Friend the Member for Wycombe, I can see no reason why a person who so wishes should not opt for treatment outside the National Health Service. Since the new Clause appeared on the Notice Paper, I have been considering the Report of the Porritt Committee, which is certainly very valuable. Sir Arthur Porritt, I gather, has referred the Report to the nine sponsoring bodies and has asked for their views. Until those views have been received, I do not think it would be right for me, least of all, to comment on what is said.
I agree that any financial assistance, such as an allowance on premiums for


medical insurance for tax purposes to the limited extent which my hon. Friend the Member for Wycombe proposes, would encourage a greater use of private medical practice. That is one of the points which the Porritt Committee made. This is self-evident and it is certainly relevant to my hon. Friend's new Clause. I apologise to my hon. Friend for not dealing first with tax relief for premiums on medical insurance. Perhaps next year he will table his new Clause earlier than my hon. and gallant Friend the Member for Carshalton. The basic question which the Committee has to decide in relation to the proposal for school fees and the proposal on premiums for medical insurance is whether there should be a special Income Tax allowance for people incurring this type of expenditure.
As one would expect, this was one of the most important issues considered by the Radcliffe Commission on the Taxation of Profits and Income. I think that its reasoning and conclusions are sound. The passage in which it dealt with these matters is not long, and I should not normally have troubled the Committee with it even at this hour but for the fact that it is directly concerned with the principle behind the new Clauses and, moreover, refers to the possibility of giving allowances on the same basis as is proposed in the new Clauses. I therefore think that I should quickly read it because it is certainly very relevant. The Commission states:
We have been pressed to admit not merely the forms of family circumstance that we shall categorise later but also such matters as social responsibilities, medical expenses, disability, children's education, household maintenance. All these claims have their persuasive elements. But they must be judged in the light of a rule to which we have had again and again to refer our own tentative proposals: income tax is an annual tax that has got to be administered. It is a tax that has to be collected each year from many millions of the population. It cannot therefore proceed on the basis of minute inquiries into a multiplicity of personal circumstances of individuals. The range of allowances must be limited to certain broad categories of distinction that commend themselves by their obvious justice: they must be simple in their terms and free from detailed refinements. We should not regard these limitations as sacrificing equity to administrative requirements, for in tax matters there is no equity in that which is not reasonably capable of being put into practical operation.

I make no apology for reading that passage because it is right on the ball on this occasion, and I am sure that the conclusion of the Royal Commission was the right one. It was the view taken also by my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) and it is the view of my right hon. Friend the Chancellor of the Exchequer. Therefore, while I certainly sympathise with the objectives behind the two new Clauses, I hope that in view of what I have said, my two hon. Friends will not seek to press them this evening.

Mr. John Hall: My hon. Friend has not dealt with the question of the cost of my new Clause. Is he able to give an estimate of the cost and to comment upon my suggestion that it might result in an overall saving?

Mr. Barber: When my hon. Friend raised the point I made inquiries, but my information so far is that it is not possible to give him any meaningful figure of the cost of his new Clause. I doubt whether there would be a net saving to the Exchequer if we accepted the Clause, but it is a matter of opinion.
Certainly, there can be no doubt that the greater the extent to which people resort to private medical practice, obviously to that extent there would be a saving to the State. That I accept. I regret, however, that after making inquiries to try to provide an answer to my hon. Friend I was not able to do so.

Question, That the Clause he read a Second time, put and negatived.

New Clause.—(CAPITAL GAINS TAX EXEMPTION LIMIT.)

In section 13 of the Finance Act 1962, after subsection (8) there shall be added the following subsection:—

"9) For the purpose of this section any profit not exceeding £100 in any year of assessment shall be ignored "—[Mr. W. Clark.]

Brought up, and read the First time.

Mr. W. Clark: I beg to move, That the Clause be read a Second time.
We have had an interesting debate on school fees and now, no doubt, hon. Members opposite will get a little excited about this new Clause, too, and will say that it is a Tory reactionary movement by the capitalist system.
My hon. Friends and I who put down the new Clause are grateful that this year, again, we have had the opportunity to discuss the capital gains tax, which was introduced last year. Its object was to catch the large manipulator of stocks and shares, the man or woman who was making a living out of buying and selling them. The object of the new Clause is that whale it is right to catch the large manipulator in that way, we should not penalise the small investor.
There is no question that the capital gains tax and Stamp Duty—although the Government should be congratulated on making a partial move towards the abolition of Stamp Duty—are deterrents to saving. I do not at this hour intend to recanvass the necessity for increased invesment, but anything that activates against investment or saving should be examined carefully. In referring to savings, I speak of the savings of small people. The object of the Clause is to exempt from the capital gains tax the first £100 of an increase in capital value.
It may happen that a small investor who is not manipulating the exchange and is not making a living from the buying and selling of shares may, for various circumstances, have to change his investment. Many of the people who have £300, £400 or £500 invested in equity shares may be advised by their bank manager or by a friend on whom they place reliance to change their investment. In the transaction, no money passes. The person concerned merely comes out of share A and goes into share B. If, however, there is a capital appreciation on the transfer, although it is not spent, it will be taxed.
In another case, the sale of an investment may become necessary on a person's death. Is it to be expected that if a small investor dies within six months of making the investment, the profit which has accrued meanwhile should be charged to Income Tax? I am sure that the Revenue cannot take this narrow view towards small investors.
8.45 p.m.
I do not suggest that an exemption of £100 is necessarily the right figure. would be prepared to accept £50, or £25, or even £15 as the limit. The mythical £15 in the trustee and Post Office savings banks could be the limit. The hon. Member for Sowerby (Mr. Houghton) knows more about this than any other

person in this Committee, but I have no doubt that administratively the Inland Revenue cannot afford the manpower to chase these small investors. Indeed, during our discussions on the Finance Act, 1962, the then Financial Secretary admitted this in so many words. Thus, from the point of view of equity and for the sake of administrative convenience there is a great deal of sense in proposing an exemption limit.
No doubt my hon. Friend will reply that any appreciation from selling or buying shares, whether small or large, is in the same category as any other income. That was said last year. But this income is not comparable with the other sorts of income which come under Case VII. The Inland Revenue itself has accepted the fact that this is a particular type of income and is not liable for set-off. We always speak as though anyone who invests in shares necessarily makes money. We must remember that some people make losses. If a loss is made during the year, and if the Inland Revenue says that the income is the same as any other and will not give an exemption, it is then making Case VII available to set off other income.
I urge my hon. Friend to remember there is great feeling in the savings movement that this capital gains tax is a deterrent to the savings which we must have, and that the Government should not put any obstacle in the way of the small investor. I am not interested here in the large investor but I am interested in the small investor. I hope that my hon. Friend will look at this sympathetically.

Mr. F. M. Bennett: Last year, I was delighted to support my hon. Friend the Member for the best of the Nottingham seats, and I am equally delighted to do so on this occasion because none of the arguments which he and I produced a year ago, and which he has again produced tonight, has been proved otherwise than more effective than when we originally introduced them. My hon. Friend has mentioned a number of arguments. There is, in addition, the practical argument that, whatever the Government may say and the Committee decide tonight, the Inland Revenue, in its wisdom, will not pursue these very small amounts. To some extent, therefore, we are arguing about something which, for administrative


reasons, is already regarded as uncollectable—if one can use such a term.
I was interested to hear my hon. Friend the Financial Secretary on the last Amendment, and I now invite him to comment in the light of this Amendment. My hon. Friend finished his remarks in a blaze of oratory, saying, "For in taxation matters there is no equity in that which is not reasonably capable of being put into practical operation".

Mr. Barber: I was quoting the Royal Commission Report. I do not approve of every phrase in that Report, but I felt that in this case the sense was right, although not necessarily the phrase.

Mr. Bennett: My hon. Friend should not be so bashful. I am commending his choice of rhetoric in this connection, and I hope that he will not claim that a phrase which he chose out of the Royal Commission's Report for the last new Clause is not equally applicable to arguments which he proposes to adduce on this new Clause. I hope that he will not mind if I say that my hon. Friends and I may be even more inclined than we are at the moment to press the matter to a Division if he produces one kind of argument for the last new Clause and another in connection with this new Clause. I was on the edge of sleep when we were discussing the last new Clause, and I was awakened by that sudden burst and thought that the argument which he then used would be remarkably effective in the present context.
Despite the fact that we were attacked by hon. Members opposite, who said that we were trying to protect the regular speculator and the regular gambler, last year my hon. Friend and I emphasised that what we were seeking to do was to protect from the full onus and very expensive operation of the law the investments of a comparatively small section of the community who were not regular speculative gamblers but were trying to invest quite small sums of money. As I said before, and as I repeat, my hon. Friend must deal with that point. I do not think that he will challenge me that in fact the Inland Revenue at the moment does not bother to collect these very small sums and that therefore we shall simply be acknowledging a state of affairs

which exists at the moment rather than setting out any new law.
My hon. Friend the Member for Nottingham, South (Mr. W. Clark) has produced so many good arguments that I propose to add only one more. I fully supported, and still support, the speculative gains tax, which was introduced to deal with those who attempted to make income out of calculations and computations which brought them in income but which they claimed to be capital transactions. This does not apply to the sort of transactions with which we are dealing tonight.
There are many people in the country who are genuine savers in gilt-edged but who may buy within six months of redemption. If the securities are redeemed within six months, which is a matter not within their discretion but within the discretion of the Treasury, which picks the redemption date, they are caught by the full burden of the new tax. I do not think that that was in my hon. Friend's mind when the new tax was introduced.
I ask him tonight to look again at this matter, not only on grounds of administrative convenience, but on grounds of social justice. It is not worth while pursuing very small gains of this sort, more particularly when I suspect that if one pursued these very small gains one would have to take into account very small losses. I would have a heavy bet that, in that event, it would mean a net loss to the Revenue overall if we took into account all the transactions in this field. I ask my hon. Friend to be more susceptible than he was last year in replying to the suggestion which has been made tonight, even if the figure of £100 is not right and if the wording is not explicit.

Mr. Walker: I support the new Clause which has been moved by my hon. Friend the Member for Nottingham, South (Mr. W. Clark). I recognise that this proposal may well not appeal to hon. Members opposite, and perhaps as a compromise solution with them, instead of having a limit of £100, we should alter the wording of the Clause so that nobody could be taxed unless he had a total investment of £20,000, which comes within the general spirit of the taxation proposed by hon. Members opposite.
This is a tax which has been in operation for only four months and as yet,


presumably, the Revenue has had little experience of the difficulties of collecting it. It may, therefore, be reasonable for my hon. Friend the Financial Secretary to say that because of the Revenue's lack of experience of the difficulty of collecting the tax it is not possible to advise upon any particular change. But I ask for a further assurance from my hon. Friend—my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) having stated last year that a careful watch would be kept on the operation of this tax to see its effects both upon normal market management and on savings—that this watch will be sustained during the coming twelve months, when this tax will have to be collected.
I cannot help but think that there are enormous expenses and complications in collecting from the small investor who may have had certain transactions in the past year. As somebody with an interest in unit trusts connected with small investors, I know that one of the important factors in dealing with small investors is to try to make things as simple as possible.
One of the things which deters the potential small investor from purchasing shares is that he recognises that there is a tax called the speculative gains tax, but he is not certain how it operates and he is not certain what records he ought to keep to be able to declare his tax at the end of the year. This may be a real deterrent to persons contemplating their first investment, possibly in the company in which they are employed.
It also has the effect of perverting the issue market, because whereas, fortunately, many small investors are now being allocated numbers of shares in new issues, the price of the new issue is perverted for six months while waiting for the tax position to come into operation. Therefore, although I would be delighted if the Financial Secretary accepted the new Clause tonight, if he finds himself unable to do so I hope that he will give us the assurance that he will keep a careful watch on the situation.

Mr. P. Browne: My hon. Friend the Member for Torquay (Mr. F. M. Bennett) will remember that about four years ago I made a speech in his constituency in which I suggested that we should have a capital gains tax. He did

not seem to mind. I was surprised that in the newspapers of the following day it was said, "Tory M.P. wants capital gains tax". We had one two years later.
But when I was talking about a capital gains tax I was thinking particularly of the land speculators, whom we have not yet caught by this present tax. On the other hand, we have caught the small investor who is just the person we want to encourage and not to catch. I was sorry to hear my hon. Friend the Member for Nottingham, South (Mr. W. Clark) say that he did not mind whether the figure was £100 or £25. I think that it is important that the limit should be £100 and I hope that if the Financial Secretary does not accept the new Clause we shall vote on it, as we should, as a matter of principle.
I have one other reason for being particularly interested in the figure of £100. In 1960, I had an Adjournment debate on War Loan, one of the undated Government stocks, to which the reply was given by my hon. Friend the then Economic Secretary, now the Financial Secretary. We had the usual stonewalling answer. I believe that throughout the country there are many investors in undated Government stock, particularly War Loan, which was bought during the war for patriotic reasons, or as the result of getting advice from bank managers—which, everybody who is sensible knows, one should never do—who lost a considerable sum of money. In view of the unsatisfactory nature of the reply I had in 1960, I have formed an association of gilt-edged security holders in order to give a voice to these people and to try to persuade the Government and all candidates at the next election that they have to do something about it.
9.0 p.m.
One of the things that we are doing, annually, and we are doing it at the end of July this year, is to have a redemption draw which will enable any member of the association who has undated stock to redeem up to £200 of stock at par, for which the association will pay and take the stock from him.
This means that somebody who has recently bought some War Loan and takes part in the annual redemption draw will pay tax on £120 worth of capital gain on a stock which stands extremely low on the market at the moment. This


is why I am particularly interested in the figure of £100. I should like it to have been higher. I accept that the majority of people whom the council and I are trying to help have had stock for some time and will not be caught by this tax, but others may well be, and I think that it behoves the Government to try to ensure that stock stands a little higher on the market than it does today and to try either to date it or do something to help those who hold small amounts. I am delighted to have got that off my chest, Sir Norman, because I did not think that you would consider it to be in order.
It is a tenet of Conservative faith that we should do all we can to encourage savings and small investors, and with this belief I think that there should be an exemption for the first £100 of capital gains within the given period of six months. For this reason I hope that the Financial Secretary will agree to accept this new Clause, and if he does not I trust that my hon. Friends and I will vote for it.

Mr. Barber: My hon. Friend the Member for Worcester (Mr. Walker) asked for an assurance. He pointed out that the collection of this tax under Case VII was not yet taking place, and he is right. As this is a new form of taxation, I can without hesitation give him the assurance that throughout this year we shall continue to look, as we have done over the past year, at the operation of the tax. I am sure that that is an assurance for which my hon. Friend will be grateful, and it is a very realistic one.
The purpose of the new Clause is to exclude for the purposes of that charge to tax under Case VII any profit not exceeding £100 in any year of assessment. My hon. Friend the Member for Torrington (Mr. P. Browne) thought that the figure of £100 was particularly important, whereas my hon. Friend the Member for Nottingham, South (Mr. W. Clark) said that he was prepared to have a lower figure such as £50 or even £25.
It is important for the Committee to bear in mind that if there were to be an exemption limit for even the smaller amount, say £25, the calculations would still have to be made to determine what the profit was. This is highly relevant to the point made by one or two of my

hon. Friends, that this would cause a great deal of trouble and that it was not really worth collecting these small amounts. One would still have to do the computation to find out whether or not the particular taxpayer had made more than the permitted maximum.
I propose to address myself to the substance of the new Clause, but I should point out that as drafted the new Clause would not seem to achieve what my hon. Friend has in mind, or what I assume he has in mind from the way in which he moved it. I take it that what he wants to do is to exempt total gains not exceeding £100 in any one year. As drafted, I am advised that the new Clause would exempt gains not exceeding £100 on individual transactions, and, as my hon. Friend will appreciate, this is different from exempting gains not exceeding that sum.

Mr. W. Clark: I think that my hon. Friend knows the spirit of this, that there should be exemption for £100 net gains in any fiscal year. If my hon. Friend is going to be a bit more sympathetic, let us also exempt the first £100 loss from carry forward.

Mr. Barber: I said that I proposed to direct myself to the substance of the new Clause, but I should point out, lest it should be misunderstood by anyone outside the Committee, that if the intention were as drafted, it would lead to exempting substantial total gains, which is not the intention of my hon. Friend.
This Clause really challenges the basic principle which underlies the tax on short-term gains. I will explain why in a moment. First, may I say that I am well aware that some people quite sincerely prefer what I might call the conventional type of capital gains tax—a quite separate tax, perhaps with special rates graduated according to the period for which the asset is held. In that event, I suppose that it might be possible to provide for an exemption limit, but the fact is that, for reasons explained at considerable length on a number of occasions by my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) last year, the principle behind the tax on short-term gains is that the gains are taxed as income in the ordinary way.
My hon. Friend the Member for Nottingham, South, as I understand it, while he accepted that this had been said last year, challenged it. But the fact is that this was the basis on which the tax was introduced and the basis on which it is operated.

Mr. W. Clark: Why not allow a set-oft if there is a loss?

Mr. Barber: My hon. Friend asks why not allow a set-off if there is a loss under Case VII against other income. There were special reasons for deciding that last year.

Mr. Clark: What are they?

Mr. Barber: There was a number of reasons which were set out at great length, and if my hon. Friend will look at HANSARD he will see them set out. I would say in answer to the point made by my hon. Friend, which was a very valid one, that there are, of course, as he knows, other incomes of particular kinds, losses on which can be set off against profits from the same sort of transaction. The transactions that I have in mind are cases of losses from transactions which if profitable would produce liability under Case VI, but if there is a loss that is allowed only against other Case VI liability and not against other income in general.
I make this point because the idea of set-off being allowed only against items in the same category was not something new in relation to Case VII incomes. Suffice it to say, it is in relation to the basis that income on short-term gains is to be treated as income in the ordinary way, that this new Clause has to be considered. I am not arguing at this stage whether that is right or wrong, but it is certainly the basis of the proposals of my right hon. and learned Friend the Member for Wirral. It must follow from what I have said that, as short-term gains are to be treated as income, the question of the rate of Income Tax must depend on the taxpayer's total income. This, of course, is the principle which is applied to any other item of income such as, for example, a dividend. Bearing in mind that these gains are to be treated as income, I cannot help feeling that if we were to do what is proposed in this new Clause, other taxpayers could argue with some cogency for an exemption on small amounts of, say, investment income.

Mr. John Diamond: Hear, hear.

Mr. Barber: As the Committee knows. I am in favour of encouraging the small saver. But the fact that a person's short-term gains do not exceed £100 in a particular year is no reflection of the size of his wealth—

Mr. Diamond: Hear, hear.

Mr. Barber: It really all depends—I wish that hon. Gentlemen opposite would not cheer too much, because it makes my life very difficult—it all depends on how the taxpayer orders his affairs.

Mr. Douglas Jay: The Financial Secretary must realise that when he says something which is true, we simply cannot help cheering.

Mr. Barber: Then I expect the rest of my speech to be deafened by the Opposition cheers.
Such exemption would be of greater benefit to the man with a large income compared with the man with a small income. It would effectively pick up Income Tax, and Surtax as well. The real reason why a proposal on the lines of this Clause is not appropriate stems from the fact which I mentioned at the outset—it may be agreeable or disagreeable to my hon. Friends—that the short-term gains in question are to be treated as ordinary income.

Mr. F. M. Bennett: I think that my hon. Friend owes it to the Committee to tell us whether in practice and in fact the terms of the Amendment have been followed by the Inland Revenue authorities. Is the Inland Revenue, or is it not, pursuing the very small man with the sort of limit which we set?

Mr. Barber: I thought I made clear in answer to my hon. Friend the Member for Worcester that the Inland Revenue has not yet started to collect the tax. That follows from the normal timing of its introduction. I can assure my hon. Friend the Member for Torquay (Mr. F. M. Bennett) that if he made a £90, £80, £70, £60, £40, £30 or £20 capital gain the Inland Revenue would seek to collect on it.

Mr. Bennett: At 4s. 6d.?

Mr. Barber: They will treat the 4s. 6d. profit as capital gain in exactly the same way—

Mr. Bennett: How much would it cost to collect?

Mr. Barber: My hon. Friend keeps interrupting me.
The case is exactly the same as for 4s. 6d. in other income. This is being treated in the same way as other income. The occasional taxpayer may get away with it on one stock, and he may get away with this.

Mr. Houghton: Would the hon. Gentleman like to face his adversaries? If so, we will make room for him on this side of the Committee.

Mr. Barber: I think it time that I brought this speech to a close. It being the case that these short-term gains are to be treated as ordinary income, and whatever may be appropriate for a full-blooded capital gains tax, I hope that the Committee will take the same view as it did last year, namely, that proper means of providing relief must depend on the total income of the taxpayer.
I think it most useful that we should have had this debate. It was only last year that the change under Case VII was introduced and it is useful that we should have an opportunity to go over it again. Whatever views my hon. Friends may hold about the basis of the change under Case VII and about the principle behind this Clause. I am sure that they will bear in mind what has been said.

Mr. Diamond: I shall not be too long, but I feel that it would be right if occasionally an hon. Member on this side of the Committee took part in the discussion. [HON. MEMBERS: "Hear, hear."] Naturally, we limit ourselves very considerably, and we do not wish to prevent hon. Members opposite from attacking the Government regarding Clause after Clause, as they would wish to do. But it would be right, I think, for me to say a word or two on this matter.
I might perhaps start by extending an apology to the Financial Secretary for having interrupted his speech with sounds of acclamation. But we wanted to make clear to the hon. Gentleman

that when the Division came, and all the hon. Members behind him went into the Lobby to vote against the Government Front Bench, we should summon all our troops to his support. I thought that the hon. Gentleman would be encouraged by those sounds.
I see that the hon. Member for Torrington (Mr. P. Browne) has returned to the Chamber. I was very interested—the hon. Gentleman will know this from happenings on other occasions—in his views about gilt-edged stocks and a long distance redemption date. I think it helpful to the Committee that we should switch from the discussion of the Clause under consideration to a full discussion on gilt-edged and the putting of a redemption date in undated stock.
9.15 p.m.
A number of hon. Members have made remarks which I think were perhaps not absolutely directed at proving the value of this Clause. First, the hon. Member for Nottingham, South (Mr. W. Clark) rested the whole of his case on the contention that this is something to do with small investors. He did not prove that contention. I was astonished. He is always so accurate, helpful and logical in his arguments. I waited carefully. I listened to every word he said. At no time did he explain to us why this would be a method of searching out and separating the small investor from the rest, and why, for example, there could not be a very large investor who bought and sold a number of stocks and had a number of transactions during the course of six months, the net result of which was a profit of £98 or £97. That could very well be the case. Over the last period, for example, it could very well have been the case that on hundreds of thousands of pounds invested there would be a margin of that kind.
At all events, although the hon. Member for Nottingham, South may have had in mind something to do with small investors, it is obvious to all of us that the Clause as drafted has nothing whatsoever to do with small investment. It merely has to do with what the hon. Gentleman would perhaps call a small amount of profit in terms of capital gain made in any particular year. It has no relation, as the Financial Secretary made


quite clear, to the position of the taxpayer concerned.
The argument that it would result in administrative saving was a very obvious fallacious argument, and the Financial Secretary explained that. Again, I should have thought that the hon. Gentleman with his great knowledge in these matters—after all, he belongs to a very distinguished profession—would have understood full well that it takes just as much time to find out whether something amounts to over £100 or to less than £100. Obviously, all the work has to be done just the same by the taxpayer and by the Revenue to ascertain whether there is a charge lying.
I do not think that the Financial Secretary paid quite enough attention to the remarks of the hon. Member for Worcester (Mr. Walker). The hon. Member for Worcester moves in circles where this is everyday practice. He is well-informed, and he well understands these matters. He made the very valuable point indeed that the market is being completely upset by this short-term capital gains tax, particularly with new issues. This is true, but the Government did not answer the point. Why do not the Government extend the period of six months? At the moment the ridiculous situation exists, owing to the short-term capital gains tax, in which, as we forecast time and time again, everybody to avoid the tax hangs on for six months. They sell the stocks six months and one day after purchase, instead of within six months.
The hon. Member for Worcester pointed out that in terms of new issues there is no real free market until six months have elapsed. This is how everybody avoids the tax. Therefore, there is no tax and the market is disturbed. The hon. Member for Worcester was on a very solid point. The only way of satisfying his argument would be to remove the six months' limitation. Why do not the Government do that? Why do not they propose to remove the six months' limitation and make the tax lie whenever the transaction takes place—after three months, after three days, or after three years—in the way that most other civilised countries deal with their capital gains tax, and not have it in the form of an artificial short-term?
I hope that the Financial Secretary will, as he often says he will, read HANSARD very carefully tomorrow, reread the remarks of his hon. Friend the Member for Worcester, and consider between now and Report whether we might have a thorough-going capital gains tax brought in which we could then fully consider. In the meantime, I must say that the Financial Secretary's arguments were solid and fair. We were quite convinced by them and we shall support him in the Lobby.

Mr. Stevens: When I first saw the new Clause on the Notice Paper I was very much attracted by it. I did not think that the short-term capital gains tax was meant to catch the small man—good luck to him. I am sorry to tell my hon. Friend the Member for Torrington (Mr. P. Browne) that I shall not be joining him in the Lobby this evening, because I have been very much impressed by the powerful arguments advanced by my hon. Fiend the Financial Secretary as to why the Clause cannot be supported. I particularly noted what he said about the nature of these capital gains. He said that they were exactly the same as any other income. He used that phrase several times, and I accept what he said as the main reason why he is unable to accept the new Clause.
To follow that to its logical conclusion, any losses must equally be the same as any other losses; in other words, they should be available for set-off against these capital profits. I hope that in the searching examination to which my hon. Friend referred, and which is to be made by the Inland Revenue this year—and I hope that my hon. Friend the Financial Secretary will join in it with his officials—this point will be borne in mind so that next year we may find a provision whereby these losses are the same as any other, and may be set off.

Mr. Barber: In view of what my hon. Friends have said there is only one course open to me, and that is to abstain.

Question, That the Clause be read a Second time, put and negatived.

New Clause.—(INCOME TAX ALLOWANCE FOR IMPROVEMENTS TO RENTED PROPERTIES.)

Where a landlord carries out improvements to controlled rented living accommodation an


annual allowance of 10 per cent, of such costs shall be allowed for the ten years following as a deduction from gross rents received.—[Mr. W. Clark.]

Brought up, and read the First time.

Mr. W. Clark: I beg to move, That the Clause be read a Second time.

The Temporary Chairman (Sir Norman Hulbert): I think that it would be convenient for the Committee to discuss, at the same time, the new Clause No. 63 standing in the name of the hon. Member for Crosby (Mr. Graham Page), "Income Tax: Allowances on rented dwelling-houses".

Mr. Clark: I do not think that there will be as much controversy over this new Clause as there was with the last one. It concerns Income Tax allowances for improvements to rented property. Between the time of tabling the Clause and today the Government have thought fit to bring out their White Paper on Housing, and without wishing to violate the rules of order I would like to point out how well that document has been received in the country.
The White Paper is a tribute to the progressive housing policy of the Conservative Party since 1951. It shows that even after twelve years of Tory rule this party still has fresh ideas on housing and that we are stepping up the annual rate of house building from 300,000 to 350,000. I appreciate that this does not come within the ambit of the Clause, but the White Paper shows that the Government have set their mind to improving and increasing the number of houses.
The Clause deals only with improvements to controlled, rented property and I would like to make this perfectly clear. We now have this position. If a landlord improves his property he gets an improvement grant of up to half of the cost of the improvements, provided the local authority in the area operates these grants. This is one of the fallacies in our law; that an improvement grant is discretionary while a standard grant is mandatory.
If the landlord happens to live within the area of a local authority which does not operate improvement grants the whole idea of improving property throughout the country is brought to nought, and I hope that that will be righted in future.

Let us consider the case of a landlord who is in the area of a local authority which operates improvement grants and who gets an improvement grant on his property. Let us assume that he spends £1,000 on improving his rented, controlled property. He will get a 50 per cent. grant and he must find £500 himself, assuming that he can convince the local authority that the £500 is all improvement.
But when there is any improvement to any property the total amount paid to the builder is not necessarily the total amount allowed for improvement grant, because with any improvement one naturally catches up with the maintenance of the property. In circumstances where £1,000 is being spent for the purpose of the improvement grant, that figure is reduced to, say, £800 and, consequently, the landlord gets 50 per cent. of that, which is £400. He himself must pay £600 to improve his property.
I appreciate that with his controlled rental he can then increase his gross rent by 12½ per cent. of the amount he pays for the improvement, but we have to remember the increased additional expenses which he has on that rented property. Collection charges go up because he has improved the property. Insurance charges go up and with 7s. 9d. in the £ Income Tax which he will pay on excess rent it will be found that instead of getting 12½ per cent. an capital outlay on his increased investment it will be 6½ per cent. or 7½ per cent. One might say that that is good, but the Minister of Housing and Local Government, in his White Paper, has accepted that many houses are capable of improvement and we should give every incentive to landlords to improve them.
For this purpose, we are trying to take the amount which the landlord spends on improvement and give it to him as an allowance on gross rents over the succeeding ten years. Is my hon. Friend, in his reply, to take me up on the wording of the Clause? The spirit behind it is to give more incentive to private landlords to improve their property for ranting. That will not only improve the condition of the property, but also improve the living standards of the people who live in the property. If we could do that, I am sure that it would bring rented property into the category of an industry.
I remind my hon. Friend that the Chancellor, when introducing the Budget, said that with the abolition of Schedule A on owner-occupiers and rented property he wanted to treat rents from property as any other business. If that is the premise on which he works, it is quite right to allow some percentage of improvement to that property as a deduction from gross rents.

Mr. Houghton: I have been following the hon. Member carefully and with some sympathy, but he has not yet mentioned the right of the landlord who improves rented property, even controlled property, to pass on to the tenant a percentage of the capital expenditure as an increase in rent. Will the hon. Member deal with that?

Mr. Clark: I am sorry if I omitted that. I rather thought that in the hypothetical example I gave I said that a landlord could increase the rent by 12½ per cent. of the amount he had spent on improvements. Obviously there is an increase in rent for improvement. The argument was based on the fact that even with an increase in rent there is an increase in expenditure.
The hon. Member will remember that I spoke about increased collection charges. They must increase if the rent increases and insurance charges must increase if the rent increases. I mentioned that if 7s. 9d. in the £ Income Tax is taken off, rather than getting 12½ per cent. on the investment it will probably work out at 6½ per cent. I want to give to the landlord, over ten years, as a deduction from his rent, one-tenth of the amount that he has spent on improving rent-controlled property.

9.30 p.m.

Mr. Graham Page: I wish to address my remarks to new Clause No. 63, which is intended to achieve something of the same object as that of my hon. Friend the Member for Nottingham, South (Mr. W. Clark) in new Clause No. 44. New Clause No. 63 would concede to those constructing houses to let the same concession as is made in capital allowances to those constructing industrial buildings. Those concessions appear, as the Committee will know, in Chapter 1, Part X of the Income Tax Act, 1952, and they are two-fold—the initial allowance of 10 per cent. and the annual allowance spread over a period of years.
May I dispose of one or two possible criticisms of the idea that those constructing houses to let should have capital allowances conceded to them? It might be said that if a person builds a dwelling house or a block of flats these days he will be able to sell it a short time later at an enhanced value even if it be tenanted and without vacant possession. It might be said that in being given these capital allowances, the developer or the builder would be able to pocket them twice over and that we should be handing out tax concessions to the Cottons and the Clores, as it were. But that is not really the case, because under Section 127 of the 1952 Act there are balancing charges which take care of that sort of thing.
Section 265(5) also takes care of the position if the building is not used for the purpose for which it was being built. That subsection provides that the allowance is not made if a building which is intended as an industrial building is not used eventually as one. If the new Clause of which I am speaking applied. that would be so and no relief would be given if the building were not used as a rented building in the end. Therefore, it would be quite practicable to give capital allowances in respect of the construction of rented houses and flats as it has turned out to be quite practicable to give such allowances in respect of the construction of industrial buildings.
Let us assume for a moment that a developer is contemplating constructing a single house for letting, or a block of flats. What elements of expenses and return on his money must be taken into account in deciding what rent he will be able to charge for these dwelling-houses? Certainly one element which he would take into account, if he were wise, would be the wasting nature of his assets. He may consider that his buildings could become obsolete after 60 years, 80 years or 100 years, and he will amortise over that period.
It is true that one can charge against taxable income the cost of repairs to dwelling-houses, but there is an element of capital wastage which can never be overtaken by repairs, however frequently those repairs are done. Not only will the structure decay, despite the repairs, but standards of living and the habits of living continually change and so


dwelling-houses become obsolete. One has only to compare the contemporary house with the Victorian house. This obsolescence or wastage of the assets is as much an expenditure wholly and exclusively incurred in the provision of houses to let as is the periodic expenditure on repairs, and it is fair that it should be allowed in the same way as expenditure on repairs.
In his Budget speech the Chancellor of the Exchequer spoke of our taxation system depending upon fairness. I am not quoting his words accurately, but I think that that was the sense of them. If the taxation of any business is patently unfair, then people are not going into that business, or if they are in it they are coming out of it. It must be remembered that in order to go into the business of building houses to let one has to be thick-skinned enough to be regarded by one political party as some evil criminal just because one is a landlord, and one has to be optimistic enough that that political party will not take office and fix the rents according to some political convenience.
In face of those embarrassments and, indeed, in face of competition from subsidised council housing, and with an unfair tax as well, is it any wonder that in the White Paper on Housing, just published, the Government have said:
Since the war there has been almost no building to lot other than by public authorities. Fear of rent control, and of the problems associated with management, maintenance and repair has discouraged private investment. The result is a gap in housing provision; and this the Government intend to see filled.
I suggest that the new Clause is the way to fill it.
Capital allowances for industrial buildings were granted—and here I quote my hon. Friend the Financial Secretary on 21 st May—
to encourage the expansion and modernisation and re-equipment of the premises of productive industry."—[OFFICIAL REPORT, 21st May, 1963; Vol. 678, c. 252.]
Here in this White Paper on Housing the Government have admitted the grave shortage of houses to let and the need to encourage the provision of such houses, in the same way as it was necessary, when capital allowances were introduced for industrial buildings, to encourage the provision of industrial buildings.
In the White Paper the Government go to such an extent in suggesting encouragement for the provision of houses to let, that they turn to the building societies to produce £200 million. They suggest making £100 million available to a Housing Corporation, to pay the administrative expenses of such a corporation, and they go to such un-Conservative lengths as to provide that nationalised housing body with compulsory acquisition powers—all in order to set up housing societies which, by present experience, people do not want very much. It is a good enough scheme for a small number of houses, but it will not produce nearly enough houses to let. I believe that if those developers and builders who are prepared to come forward and build the houses to let were given this fairness in the taxation of their business, they would provide those houses in far greater number than would be provided by any system of Housing Corporation or housing societies.
The Government, in this White Paper, have set their sights far too low in their target of 350,000 a year. We want 150,000 a year more than that and some of them at least could be provided by this sort of encouragement which I am suggesting to those who will provide houses to let, by playing fair in the matter of taxation with those who are prepared to go into the business of constructing rented dwellings.
I ask for these capital allowances for those who are prepared to carry out this construction on two grounds—on grounds of fairness to that business, and as a matter of policy to encourage that business, as the Government wish, according to their White Paper, to encourage it.

Mr. James Allason: On both sides of the Committee we agree that there is an urgent need for far more rented accommodation in this country. The Labour Party pins the whole of its faith on council house building, and we on our side believe that the private landlord can make a useful contribution if only he is allowed to do so.

Mr. Richard Marsh: I am sorry to interrupt the hon. Gentleman so early in his speech. I am grateful to him for giving way, but he must not make such statements. He must not say that the Labour Party pins the whole of its policy on council houses.

Mr. Allason: For rented houses.

Mr. Marsh: No, not even on rented houses.

Mr. Allason: I am glad to hear that, but I have yet to hear the slightest encouragement from the benches opposite to private landlords to build houses to let.

Mr. G. R. Mitchison: Does the hon. Gentleman remember that improvement grants were introduced by the Labour Party?

Mr. Allason: I shall come to improvement grants a little later. It can hardly be said that they provide new houses to let.
A council house has a subsidy. The private developer receives no subsidy whatever. We have our wonderful legacy of Victorian houses which were built in the days when it was a good propostion to provide masses of houses in which people could live at reasonable rents. This is what we need once again. We are reminded in the White Paper that there has been virtually no private house building for letting since the war.
Here I come to the matter of improvement grants. It is extremely important that these Victorian houses should be kept in use for as long as possible to provide the accommodation which is so desperately needed until the new houses can be built. at which time the old houses will he worn out and, we hope, will be replaced as a result of our building programme being well advanced.
My hon. Friend the Member for Nottingham, South (Mr. Clark) pointed out that, on his 50 per cent. contribution to the improvement grant, the landlord will probably get between 6 and 7 per cent. per annum. An improvement grant, as the Committee knows, is made only when a house has a useful life of fifteen years or more. If the life of the house is only fifteen years, consider the position of the landlord. On every £100 he spends, he will derive a net profit of only £7 for fifteen years.
It is not a very attractive proposition to put away £100 for fifteen years until, if he is lucky, he has collected it all back again, at which stage the house becomes valueless. Landlords often recognise that improvements can be made and that there is a demand for improvement

grants, and they should be encouraged to go ahead. My hon. Friend's new Clause would remove the disincentive.
I turn now to new Clause No. 63, in the name of my hon. Friend the Member for Crosby (Mr. Graham Page). There are plenty of developers only too anxious to build, but, at present, they are building offices. It is an attractive proposition to build offices. Make it an attractive proposition to build houses to let at reasonable rents, and they will do it.

Mr. Marsh: At £3 a square foot?

Mr. Allason: No one suggests that the office level of rents should be charged for private dwellings. If the new Clause in the name of my hon. Friend the Member for Crosby were adopted, it would be an attractive proposition to landlords to build houses to let. They cannot do so now. My hon. Friend's proposal for capital allowances for this purpose fulfils a definite need. It is in no way unreasonable, and I hope that the Government will accept it.

9.45 p.m.

Mr. Walker: I share the motives of my hon. Friends, but I do not believe that this is the correct way to achieve the object they have in mind. If landlords fail to improve their properties, I suggest that the correct way to get them to improve them is to make arrangements whereby the allowance on rents in relation to the amount spent on improvements is increased or the improvement allowance is increased. But for many years past and for the foreseeable years of the future, private dwellings are likely to have not a decreasing but an increasing capital value.
Although my hon. Friend the Member for Crosby (Mr. Graham Page) suggested that in the sale of one of these houses this is made up by the balancing charges, a public or private company owning private houses for letting to the public would retain these properties. They would have a hidden enhanced capital value in the balance sheet, but, at the same time, would be drawing substantial financial benefits from the depreciation allowance. I hope that my hon. Friend the Economic Secretary will not adopt this method of assisting this good cause.

Mr. du Cann: We have heard four extremely well-argued, cogent and well-informed speeches. I should like, first,


to discuss the new Clauses shortly from the technical point of view and then make some general remarks about the whole problem.
I take, first, the new Clause in the name of my hon. Friend the Member for Nottingham, South (Mr. W. Clark) entitled "Income tax allowance for improvements to rented properties" which, if it were accepted, would provide that where a landlord carries out improvements to controlled rented living accommodation—I take it that that means living accommodation which for the time being at any rate is subject to the statutory rent control—an annual allowance of 10 per cent. of the cost
shall be allowed for the ten years following as a deduction from gross rents received".
My hon. Friend will recall the discussion that we had during the passage of last year's Finance Bill. Neither he nor the Committee would wish me to rehearse that for the arguments are familiar. But expenditure to be relieved under the Clause is capital expenditure and would not qualify for relief from Income Tax. Under Part X of the Income Tax Act, 1952—my hon. Friend will know this particularly for reasons which I will give—allowances can be given for capital expenditure on industrial buildings and for certain expenditure on agricultural works.
I said that my hon. Friend would know that particularly because his new Clause has a strong resemblance to the arrangements made for agricultural works, but the allowances given represent a counterpart in agriculture of the system of industrial buildings allowances and are given in respect of what are essentially instruments of production and not mere residences. It is very important to draw that distinction.
My hon. Friend the Member for Worcester (Mr. Walker), as one might expect of him, put his finger on what seemed to me a specially important point. He said that the value of these houses does not necessarily depreciate. It can remain static or it may appreciate, which is perhaps more likely judged by past history. That has to be borne in mind in any judgment of this situation.

Mr. Graham Page: Would that be an argument against capital allowances for industrial buildings if they also increased in value?

Mr. du Cann: No, I do not suggest that it would, but I am dealing with my hon. Friend's new Clause and saying that it is important to get the situation absolutely clear. It may or it may not be right to give an allowance, but one should not suggest that it is necessary to give an allowance simply because a landlord is in possession of a wasting asset. That is not necessarily the case.
The new Clause in the name of my hon. Friend the Member for Nottingham, South (Mr. W. Clark) entitled "Income Tax: Allowances on rented dwellinghouses", as opposed to the new Clause in the name of my hon. Friend the Member for Crosby, which has certain different flavours, so to speak, makes no provision for anything in the nature of an Income Tax balancing charge. It is important to recognise that that is a very serious defect in it which would have to be taken into account if the Clause were acceptable.
The new Clause proposed by my hon. Friend the Member for Crosby, whose words, I think, I can quote exactly, would give the same tax allowances in respect of capital expenditure on the construction of houses built to let as those given for expenditure on the construction of industrial buildings. The figures quoted by my hon. Friend for the allowances were not quite accurate, because he based them on the 1952 Act—I see that he acknowledges the point, so there is no need for me to go into it in detail—rather than on the present Bill and the improvements therein contained.
The allowances for expenditure on industrial buildings were granted to encourage the modernisation and expansion of our productive, manufacturing and processing industries, which are the foundation of our economy. They do not extend to non-industrial structures, about which there has been a good deal of discussion in the course of the Committee, such as retail shops, showrooms, hotels and offices, even though these may have an important role in commerce.
They certainly do not extend to dwelling-houses. It would be contrary to the purpose of these allowances as currently


constructed to adapt them to the end proposed by the Clause. It would certainly be indefensible to grant them in respect of ordinary dwelling-houses and to refuse them for commercial buildings generally. Apart from questions of merit, the cost of extension to commercial buildings would be prohibitive.
Those were the few general remarks I wanted to make technically concerning the new Clauses. Having said that, I entirely understand, and sympathise strongly with, the view expressed by my hon. Friends, or by three of them at least—and I do not think that my hon. Friend the Member for Worcester would dissent from this view—that if it were thought right to adopt these new Clauses, there would be a substantial stimulus to landlords to build houses to let. That is unquestionably true. I also agree with my hon. Friends when they say that there is need to improve living standards and that the provision of new houses, whether to purchase or to let, and by whomsoever they are provided, is an important and appropriate step forward in that regard.
Basically, the difficulty facing the Committee and my hon. Friends in considering these matters and deciding whether to adopt these new Clauses—and it was recognised by my hon. Friend the Member for Nottingham, South in his opening remarks—is that since my lion. Friend tabled the new Clause and since the discussion last year a great deal of water has passed under the bridge. In particular, we have had publication of the White Paper to which he referred. You will not want me to go into detail. Sir William, or, indeed, in more than a sketchy fashion into the proposals involved in that White Paper—

Mr. Callaghan: The hon. Member would be out of order.

Mr. du Cann: I am obliged to the hon. Member. As usual, he is following with close attention everything that is being said and he has got the next stage absolutely right—I would be our of order. Not only that, but I would be assuming responsibilities which are not mine. These are matters for my right hon. Friend the Minister of Housing and Local Government.
Clearly, we have an entirely new situation. It is true that the new Clauses

and the suggestion of my hon. Friends would have some effect. As my hon. Friend the Member for Worcester suggested, it is arguable the extent to which they would have an effect or whether this is the most desirable method to adopt. The fact is that the Government have come forward with new proposals, of which my hon. Friend the Member for Nottingham, South, quite rightly, spoke most warmly, and in those circumstances it cannot be right to put forward other proposals which, to some extent, run counter to those of the Government. It might be suggested that they are complementary. What cannot be decided at this moment is whether there is the same need for them now that we have the publication of the White Paper.
The irony, therefore, is that in the debate last year my hon. Friend was told by the then Financial Secretary that perhaps it was too early to judge the situation in the light of recent legislative developments. My hon. Friend was good enough to accept the point and to withdraw the Clause. Now we are faced with the same circumstances again. But this new situation is different in character.

Mr. Callaghan: Jam yesterday and jam tomorrow.

Mr. du Cann: The hon. Member is moralising in a most interesting way. He suggests, "Jam yesterday and jam tomorrow, but never jam today." The truth is, as you, Sir William, know, and as I and everyone else know, under the Conservatives it is jam all the time.

Mr. Mitchison: All these proposals about housing which come out every year or two are each of them, in the eyes of the party opposite, the cat's whiskers. The whiskers are different every time, but it is still the same old Tory cat.

Mr. du Cann: I really must not be led away or astray into discussion on Purchase Tax on preserves or kindness to animals. But I do claim that several million people are living in decent housing accommodation today who might not have been doing so if we had continued to have a Labour Administration. There is no question but that the rate of house building has improved and so have the grants. However, I will not pursue this matter further.
As I was saying, we have come to a new situation. It is radically different from the one before. In these circumstances, my judgment is—and I hope that my hon. Friends will agree—that the appropriate thing would be to examine the developments in this new situation, which, we hope, will have the kind of result my hon. Friends desire and have attempted to achieve with these Clauses. Should they agree with my judgment, then I hope they will not press these Clauses.

Mr. Houghton: I will make a preliminary intervention and reserve until a little later some more mature thoughts on this subject. Who would have thought that these innocent looking Clauses would be used from the benches opposite as a blatant political demonstration? Where would the Economic Secretary have been without the White Paper? What reply would he have given to his hon. Friends if he had not been able to wave the White Paper?
The hon. Member for Nottingham, South (Mr. W. Clark) says that the White Paper shows that the Conservative Party is still virile and progressive after 11 years of Tory rule. They have one advantage over us; they can publish their electioneering pamphlets at public expense, and this White Paper is one of them.
However, we should consider these two Clauses as a sober question of taxation and see whether they have any merit on that ground. I was going to stress the fact that there is a claim in the second of the Clauses for capital allowances for the erection of private dwellings to let which are denied to commercial buildings. As the Economic Secretary pointed out, it would be very difficult to give them to the one without giving them to the other. Indeed, the Committee has already rejected a Clause which sought to get capital allowances under Chapter I of Part X of the 1952 Act for commercial buildings in development districts.

Mr. Graham Page: There is also a Clause later on the Notice Paper, which might be selected, by which the hon. Gentleman could support capital allowances for retail shops apart from commercial premises.

10.0 p.m.

Mr. Houghton: This shows that one cannot consider capital allowances in

isolation. Certainly one cannot extend them to dwelling houses without becoming heavily involved in similar allowances for commercial buildings and for shops. I was a little taken aback by the political bias which the hon. Member for Crosby brought into some of his comments, because usually he makes a very objective approach to matters and is worth listening to as an expert in his own right. But when he strays into the sort of polemics which we get from other hon. Members opposite, he rather tarnishes his reputation.
If houses can be built to let at economic rentals, why are they not being built? Who is stopping the private developer from building houses or flats to let? Does the Committee think that these proposals would make all the difference? I do not think that they would. We hear of an acute shortage of houses and flats to let and of astronomical rents being demanded and paid for decontrolled accommodation which comes on the market to let. One wonders why more accommodation is not being built to let at the rents which appear to be obtainable today. Why is it? It is because it is much more profitable to build for sale, to turn over the capital and in some cases to make considerable capital gains on the way. I should like to hear from any hon. Member opposite who has any reasonable explanation why houses and flats are not being built to let when hon. Members know as well as I know that accommodation which comes on the market to rent can command very high rents indeed.

Mr. R. M. Bingham: If the hon. Member wants an answer it can be summed up in one phrase—the Socialist threat of municipalisation.

Mr. Houghton: All I can say in reply to that is that there must be a great many people positively haunted by the fears of a Labour Government, who would design their policy to give reasonable protection to tenants and reasonable rewards for landlords. If houses were taken over by municipalities it would be because private landlords had failed to provide reasonable accommodation at reasonable rents.
I apologise to the hon. Member for Nottingham, South for having missed his


reference to the addition to rents which can be made where a landlord improves a controlled house, but if 121 per cent. gross is not enough return on capital expenditure for improvements there is an Act of Parliament in which the remedy can be found, if it is justified. But it is not in the Finance Bill or in the system of taxation. It is in the Rent Acts that the remedy should be found. There are a great number of detailed points in the administration of Clauses of this kind which cannot be entirely overlooked.
New Clause No. 44 says:
Whore the landlord carries out improvements to controlled rented living acommodation an annual allowance of 10 per cent. of such costs shall be allowed for the ten years following as a deduction from the gross rents received.
But we know that if a house becomes vacant, under the Rent Act as it stands it becomes decontrolled. The landlord can then let it at an economic rental, or even at a profiteering rental, or he can sell it with vacant possession. In those circumstances, what becomes of the capital allowance which he has received and the capital allowance which he may still be receiving? That is clearly a matter of considerable importance in this connection.

Mr. Allason: Is the hon. Gentleman quite certain about that? It is my impression of the law that where there is an improvement grant and the tenant then leaves, the controlled tenancy continues.

Mr. Houghton: The hon. Member has misunderstood me. I was not referring to the effect of an improvement grant on rented property. I was referring to the terms of new Clause No. 44, which provides for a capital allowance over a 10-year period but does not limit that in any way if the house becomes vacant, and therefore decontrolled, while the 10-year period is still current.

Mr. Allason: That is my point. The hon. Member says. "And therefore decontrolled", but the controlled rent still continues where an improvement grant is in existence.

Mr. Houghton: Yes, but the Clause is not conditioned by the landlord's having received an improvement grant. The hon. Member for Nottingham, South pointed out that in a number of districts it is very difficult for landlords to get the dis-

cretionary improvement grant, and I was pointing out that the Clause makes no cross-reference to improvement grants, or to the conditions under which they are given. I concede to the hon. Member that where an improvement grant is given, there are certain conditions as to retaining the property available to let, and that is quite a proper limitation, but that is not a limitation carried into the Clause. I hope that I have made the point clear. I was saying that this was an obvious defect in the new Clause.
Those are a few thoughts on these proposals and they are clearly material to the merits of the case. Did I see the hon. Member for Nottingham, South looking at the clock? He need not worry, I am in no hurry. I can put his fears at rest at once—I have no train to catch; my home is quite near. I do not think that hon. Members should get impatient with me when I am giving a reasonable and non-political response to a highly provocative political demonstration from the benches opposite. I shall have the greatest difficulty restraining some of my hon. Friends from joining in. I can hear murmurings behind me already that I am not hitting the party opposite hard enough and my hon. Friends want to join in the fray. As the Committee knows, I like to deal with these things on an academic basis and I have endeavoured to do so.
I think that that is enough to be going on with. If the debate is continued, there may be fresh ground for asking the Committee to listen to me again.

Mr. W. Clark: I am grateful to the Economic Secretary for his sympathetic although not totally satisfactory reply. He rested his rejection of the Clause on the fact that the White Paper on Housing has just come out. I cannot recollect my hon. Friend's exact words, but the gist of them was that between now and the next Budget this White Paper will lead to an upsurge in housing and that if it does not my hon. Friend will accept my new Clause next year. On those grounds, I withdraw it.

Mr. Callaghan: It is not within the power of the hon. Gentleman to withdraw his new Clause unless it is the wish of the Committee that he should do so.

Mr. Clark: I am sorry. I beg to ask leave to withdraw the Clause.

Mr. Callaghan: I think that it would be as well for the moment to continue the discussion, because I want to make one or two points to the Treasury Bench. I am glad to see the Whips here, including the Chief Whip. I should like to address some remarks to him and to hon. Gentlemen opposite.
I think that it will be agreed that we have endeavoured to co-operate in getting these new Clauses through, and that we have done our best to get the Bill as a whole through. What we are not ready to do is to be a party to hearing a number of pre-election speeches from the Treasury Bench and from hon. Gentlemen opposite. If this is to be the basis on which the Finance Bill is to be considered, I warn hon. Gentlemen opposite that they will be here for a long time. I am glad to see that the Chancellor of the Exchequer has now arrived.
The Economic Secretary, who has been courteous and polite all the way through, lapsed in his last speech into a frank description of what he thought the Tory's election programme ought to be. I am willing to debate that on their record, but I think that we had better have an understanding about the way in which we are to deal with the remainder of the new Clauses. Hon. Gentlemen opposite can have it either way. Some of us are ready to stay here and discuss these matters all night if necessary. I am not prepared to sit here and tolerate these attacks on the late Labour Government without a reply being made. I think, therefore, that we had better decide whether we are to have a sensible discussion on the new Clauses, or whether we are to have a series of election speeches.
I could say a great deal about the Government's housing record, which I do not find wholly satisfactory, but I shall restrain myself on this occasion. I think that we must, however, decide which way we are to discuss the Bill.

Question, That the Clause be read a Second time, put and negatived.

New Clause 70.—(CERTIFICATES OF DEDUCTION OF TAX.)

(1) Where after the passing of this Mt a person makes any payment which is subject to deduction of tax by virtue of section 169 or 170 of the Act of 1952. then if the recipient so requests in writing the payer shall furnish the recipient with a statement in writing show-

ing the gross amount of the payment, the amount of tax deducted and the actual amount paid.
(2) The duty imposed by the foregoing subsection shall be enforceable at the suit or instance of the person requesting the statement. — [Mr. Bingham.]

Brought up, and read the First time.

Mr. Bingham: I beg to move, That the Clause be read a Second time.
The object of the Clause is to fill a modest gap in the present Revenue law and I hope, in the spirit of the last speech, that it is likely to prove entirely non-contentious.
At present, there are many cases where the payer pays to a recipient regular sums of money under deduction of tax. In such circumstances the reasonable payer will give to the recipient a certificate of the amount of tax deducted, the purpose being to enable the payee to obtain the proper assessment of his own position with the Revenue.
I believe that certain forms are provided by the Revenue for that purpose, but if the payer is an unreasonable person, either through laziness or stubbornness, there is at present no general obligation on him to provide a certificate. In certain special cases there is an obligation to provide a certificate, but not a general one. Fortunately, most payers are reasonable and the problem does not often arise, but where the payer, for reasons of his own, is unreasonable, great trouble and hardship can be caused, and it is to meet this situation that I have moved the new Clause.

10.15 p.m.

Mr. Barber: This Clause, as my hon. and learned Friend pointed out, makes it obligatory for a person who pays interest or other annual payments subject to deduction of Income Tax at the standard rate to give the recipient, if he requests it in writing, a certificate of tax deduction. The recipient of the payment from which tax has been deducted needs it to produce to the Inspector of Taxes in support of a claim for repayment of tax.
The Royal Commission on the Taxation of Profits and Income recommended that it should be obligatory on the payer to furnish a certificate if the recipient required him to do so. The Institute of Taxation in its Budget representations this year recommended that the matter


should now be dealt with. When a deputation from the Institute met me in February it told me that it knew of some cases where repayment of tax had been considerably delayed because of the difficulty in getting certificates.
I think that my hon. and learned Friend has a good point, and in a spirit of good will to the hon. Member for Cardiff, South-East (Mr. Callaghan) I would advise the Committee to accept this new Clause.

Mr. Graham Page: I shall delay the Committee for only a moment, and certainly not politically. If my hon. Friend is to make this form obligatory will he please look at the form itself? R.185 is the most inconvenient form that any Government Department has ever produced. The particulars are on two sides and when one has it in one's file it is a slip of paper which will not fit in anyhow. It has three or four columns on the back which a re the wrong way round. Will he look at this form and put the particulars all on one side and make it a decent shape so that it will go into an ordinary file?

Mr. Callaghan: From my personal knowledge it has not been altered for over thirty years.

Mr. Barber: Of course, we will look at it.

Question put and agreed to.

Clause read a Second time and added to the Bill.

New Clause.—(CONTRIBUTIONS TO EXPENDITURE FOR TREATMENT OF TRADE EFFLUENTS.)

(1) Where a sewerage authority in the United Kingdom incurs expenditure on the provision of an asset to be used in the treatment of trade effluents, then, in relation to any contribution of a capital sum made to that expenditure, subsection (3) of section 332 of the Act of 1952 (by virtue of which, in a case where the person receiving a capital sum would, apart from subsection (1) of that section, qualify for capital allowances in respect of his expenditure, the contributor is treated for the purpose of investment, initial and annual allowances as if his contribution had been expenditure on an asset provided for the purposes of his trade) shall apply as if such allowances fell to be made to the sewerage authority in respect of the expenditure as apart from subsection (1) of that section would fall to be made if the asset were to be so used for the purposes of a trade carried on by the sewerage. authority.

(2) in this section—
sewerage authority" means a public body having power under any enactment relating to the public health to construct and maintain sewers;
trade effluents" means liquid or other matter discharged into public sewers from premises occupied for the purposes of a trade.

(3) This section shall apply only where the contribution was made, and the expenditure in question was incurred, after the 31st May. 1963. —[Mr. Hirst.]

Brought up, and read the First time.

Mr. Hirst: I beg to move, That the Clause be read a Second time.
This is quite a simple matter, although like all these Clauses it sounds rather involved. I can explain it quite shortly. Under the Public Health Acts, 1937 and 1961, heavy expenditure can be required on industry to put its trade effluents in a form which complies with these Acts. That expenditure can be met in two ways. One method is that the company concerned itself puts in the appropriate plant and obtains the normal capital allowance under the provisions of the finance legislation by which, if I am correct, it can write off about 91 per cent. over the first five years.
The second method also adopted in compliance with the Acts is for the company to make a contribution to its local authority which then puts in the necessary plant and owns the plant. Since the company does not own the plant, it automatically follows that it gets no capital allowance. Section 332 of the Income Tax Act, which assists traders in similar circumstances elsewhere, does not apply. Such a company is faced with paying a capital sum—I want to underline that quite clearly—to the local authority in respect of which it gets no tax relief.
I suggest that this an anomaly which may he put right by the provisions in this Clause. It is a technical point but an easy one and there is nothing revolutionary about it. Irrespective of who owns the plant, capital contributions towards the cost of disposing trade effluent will attract relief on investment initially and annual allowances.

Mr. Barber: The purpose of this new Clause is to grant capital allowances to a trader for a capital contribution made


by him to a local authority towards the capital cost of works provided by the local authority to deal with his trade effluent. A local authority may impose conditions under which it will dispose of the trade effluent. Sometimes it makes a charge on a gallonage basis. In that case, no question arises because the charge is a revenue outgoing of the trader, and is allowed as a deduction in computing his profits in the ordinary way.
Where the amount of effluent is so great that a local authority may have to incur expenditure in providing treatment plant in excess of its ordinary needs, it may wish to have the trader meet the whole or some part of this expenditure. If called on, a trader may make a lump sum capital contribution to this expenditure. It is true that a taxpayer would get no relief of any sort. There is a provision in Section 332 of the Income Tax Act, 1952, to ensure that where one trader makes a contribution to the capital expenditure of another trader who is entitled to claim capital allowance, the trader-contributor—if I may so describe him—gets the capital allowance on his contribution and the allowances of the other traders are reduced by reference to the contribution. This would be of no avail to a trader-contributor to capital expenditure on trade effluent because a local authority is not engaged in a trade in relation to its sewerage functions.
I agree that this is an anomalous situation which would be corrected by the Clause. The cost of this proposal is difficult to estimate. It would be negligible in the first year, but might rise to about £3 million in due course. Eventually, it would fall to about £1 million. I agree with my hon. Friend that it is something which ought to be put right. The Clause would do this and I

am, therefore, delighted to advise the Committee to accept it.

Mr. Diamond: It goes without saying that we welcome this Clause also and would like to congratulate the hon. Member for Shipley (Mr. Hirst) on his perspicacity and understanding of the situation. A year or two ago one of his colleagues had the good fortune not only to perceive a defect in our taxing Acts, but to be enabled to draft a Clause in such a way that it was accepted exactly as drafted. We should all like to congratulate the hon. Gentleman on once more succeeding in being not only accurately informed about the state of the law—as he so often is—but on having the capacity to draft the necessary Amendment—something which hon. Members on this side find a little difficult—with such precision as to be acceptable by hon. Members on both sides of the Committee.

Mr. John Wells: May I ask my hon. Friend for an assurance that for the purpose of this new Clause farmers are included in the term "traders"? I ask this because the provisions in the Rivers (Prevention of Pollution) Act, 1961, which resulted from a Private Member's Bill promoted by my hon. Friend the Member for the City of Chester (Mr. Temple), could conceivably have an adverse effect on the farming community unless help is given to them. If we can see help for the farmers resulting from this Clause, I shall be doubly grateful to my hon. Friend for accepting it.

Mr. Barber: Farmers are traders for the purposes of this Act.

Question put and agreed to.

Clause read a Second time and added to the Bill.

New Clause.—(WHOLESALE LIQUOR LICENCES.)

To subsection (I) of section 146 of the Customs and Excise Act 1952 (licence to deal wholesale in intoxicating liquors) there shall be added the words:—

"Provided that the holder of a licence granted under this section shall not sell, supply or deliver intoxicating liquor to any person or persons at premises not being premises in respect of which a licence or club registration certificate is held, if such liquor is to be sold, supplied or delivered to any person or persons for consumption off the premises "— [Mr. Mellish.]

Brought up, and read the First time.

MT. R. J. Mellish: I beg to move, That the Clause be read a Second time.
I think, Sir William, that with new Clause No. 72 it would be convenient to discuss the next new Clause, No. 73—"Soliciting orders for liquor at unlicensed premises"—which is also in my name.

The Chairman: Yes, that would be possible.

Mr. Mellish: I hope that tonight I can make it a treble of acceptances by the Government as they are in such a good mood. I will be frank, and tell the Committee that I was asked to put down these Clauses by the National Federation of Off-Licence Holders Associations of England and Wales. This is a very reputable body, and although I see that one hon. Member is shaking his head, I should have thought that hon. Members opposite would agree that it provides a good example of all that is best in private enterprise. There is here no State ownership. These are ordinary folk with shops where there are off-sales of intoxicating liquor. They are governed by licence. They have to go to justices and obtain a licence. Having obtained a licence, they must conform to the terms of the licence. They are restricted to certain hours. They can open only at a certain time. They are by law compelled to close at a certain time.
The Clause is introduced because for some time now they have been concerned and worried about unorthodox trading which takes place in the sale of intoxicating liquor. In 1961 Parliament made considerable changes in the licensing laws. I pay tribute to the right hon.

Member for Runcorn (Mr. Vosper), who was in charge of the Measure at the Home Office at that time. He steered the Bill through Standing Committee and the House of Commons in a very excellent way. It was an important Bill. It extended the licensing hours. However, the Committee will agree that no fundamental change was made in the basic principle of the licensing system, whereby the sale of liquor to the public is controlled still by licensing justices by means of the grant of a justices' licence.
In recent years there has been a growing practice for intoxicating liquor to be supplied in wholesale quantities to private individuals employed at town halls, Government Departments, large undertakings, etc., and for the liquor to be subsequently redistributed by such individuals in small quantities to other persons employed in the same undertaking. Any transaction involving the sale of liquor without a licence is a serious statutory offence. It has always been considered that the distribution of liquor by unlicensed persons was effectively controlled by the provisions contained in Section 239 of the Customs and Excise Act, 1952, which makes it an offence to solicit orders on unlicensed premises. However, legal opinion has now revealed that the existing provisions are drawn up in such vague terms that it is doubtful whether they are capable of effective enforcement.
My argument is that, unless some action is taken to put in more precise terms the present law relating to the sale or distribution of liquor by unlicensed persons on unlicensed premises, the whole principle of our licensing system will be completely undermined.
I will give some examples of what is going on today. An unlicensed branch of a chain store and an unlicensed mobile shop are free to take orders for liquor and pass them on with impunity. For example, the licensed trade may object to a licence being granted to a particular branch of a shop, and the objection may be sustained; but the application for a licence in a nearby country branch may slip through and all the trading may be done through that branch.
The London Transport Executive, a body I normally support in most things, has a sports club at Cheam. This enables the executive to get liquor at wholesale


prices without any licence. It in turn uses the facilities of that club and is able to deliver liquor in bulk to all its transport depots.

Mr. John Brewis: Who does the executive pass the order on to? Is it to a wholesaler or to the actual distiller?

Mr. Mellish: The executive gets the liquor from a wholesaler. I was coming on to deal with how the liquor is obtained in the first place. I am sorry I have not made it clear yet, but I intend to do so. A great deal of intoxicating liquor is sold there without any licence being required whatsoever and it is being obtained in the first instance from a wholesaler. A wholesaler's licence is very easy to get. It is a matter of filling in a form. Provided the wholesaler guarantees to sell X number of cases and X number of bottles, that makes him a wholesaler. The difference is that retailers, for whom I am arguing tonight, have to conform with certain licensing laws. It is an abuse arising from the wholesaler and the supplies from him that my argument is directed to.
I am advised, for example, that there is a very large wine company in London —I will not mention its name—which supplies members of a certain trade union—N.A.L.G.0. —if it is a trade union. I suppose it is. It sells wines and spirits to N.A.L.G.O. at greatly reduced prices.

10.30 p.m.

Mr. Richard Marsh: It may help my hon. Friend's case if I tell him that I understand that the same company sells wines at Christmas to the staff of the head office of the Transport and General Workers' Union.

Mr. Mellish: That is all the more reason why it should be stopped. If I find it necessary to argue against my friends, I do so. There is no reason why, if trade unionists want to buy beer, they should not get it from the retailer and pay the proper price for it, as I do. Why should anybody in Transport House get privileges which I do not get? Most of them get better salaries than I get, because we pay our Members of Parliament such bad rates of pay—but I should be out of order to pursue that.
I understand that provident societies may also act as collectors and solicit orders for intoxicating liquor when taking orders for other commodities. It is as if they say, "If you buy A, B, C and D, we will get you intoxicating liquor at wholesale prices." The Customs and Excise know what is going on and are not vague and innocent about it. It is going on in a big way. The licensing trade feels that this method of trading strikes at the whole licensing system and that there is nothing to stop persons under the age of 18 from obtaining liquor in this way. It is asking that the law be amended in such a way as will restrict the holder of a wholesale licence and the holder of a justice's licence from being able to supply liquor to unlicensed premises. It is recognised that this is a difficult task and that there is a difficulty in drawing a line between merchants supplying a genuine association for legitimate purposes of stocking the cupboard of their headquarters—perhaps that is Transport House—and the problem of supplying one member of staff of a large hospital who is buying on behalf of 300 nurses.
The Board of Trade, I understand, is not able to enforce Section 239(2) of the Customs and Excise Act, 1952, because it contends, on the advice of its lawyers, that the words used in it are incapable of legal definition, and in no case brought to its notice could it be held that orders for intoxicating liquor had been taken or solicited contrary to the law.
I understand that the Parliamentary Secretary is well briefed on this matter. I have read from a brief which I have been given, for I am not an expert in the sale of intoxicating liquor or an expert in very much in the House. Although I am arguing on behalf of the wines and spirits trade, I do not like either wines or spirits.
I have put forward a genuine anomaly which is creating concern among people for whom I have some respect. They serve a useful purpose in the community. I become annoyed about the people who manufacture intoxicating liquor, the brewers and the distillers, because they do not help very much. I wish that they would co-operate with what I call the genuine retailer who is selling their wares. I have said before, and I repeat, that the publican and off-licensee is by and large


a credit to Britain. We get very little trouble from these people and from the way in which their houses are run. We should encourage them. If there are anomalies, I ask the Parliamentary Secretary to admit that there are and to tell us what can he done. I realise that it is difficult. I hope that the hon. Member will continue in the very pleasant way which he has shown on the last two Clauses and will concede the case which I have made.

Mr. Hirst: I support a good deal of what was said by the hon. Member for Bermondsey (Mr. Mellish). I have some interest in the matter, which I have declared to the Committee ad nauseam, and I hope that it will be accepted that I have and will be taken as read. I congratulate the hon. Member because I know what is at the back of his mind—to ensure that there is reasonable fairness and justice within the law. We do not want anyone to get advantages which they should not get outside the legitimate use of the licensing system—and that is a view in common throughout the Committee.
There is a tremendous difference between the two new Clauses in this regard. Unhappily, I must say that I do not consider the first one practicable. I accept absolutely the arguments and intentions of the hon. Member for Bermondsey, and I only wish that someone would introduce something which would be practicable. I do not know whether it is possible for the Treasury to do so, because what is required, unfortunately, is foreknowledge on the part of the wholesale dealer as to what is going to happen to the liquor after he has sold it. That is a difficulty with which we have to contend here.
It is, of course, illegal for the customer to sell the liquor unless he holds a licence or a club certificate. What is happening is that someone in a canteen or business house who is a staff member buys as an agent on behalf of other people at preferential rates in order to get round the clear intentions of the Licensing Act. I should be grateful if we could get over this because it is not fair to people who are doing ordinary business, paying exceptional rates and conducting their business in a proper way.
I cannot say to my hon. Friend that he should accept this new Clause, but I hope that thought will be given to the matter to see whether the objects which the hon. Member for Bermondsey has put forward, in much better detail than I am doing, can be met.

Mr. Mellish: I would certainly withdraw the Motion and new Clause if I were promised that an appropriate Clause would be introduced on Report.

Mr. Hirst: The second new Clause is much easier, and I do not see why it should not be accepted. It seeks to prohibit the taking of orders for intoxicating liquor at unlicensed branches of merchants licensed elsewhere. It is a perfectly straightforward matter, and has been argued before. I have never heard why it cannot be answered. It is practicable, and it does not have the difficulties of the first new Clause.
I should like my hon. Friend to consider it most carefully, and if he has not come here with certain advice—because, knowledgeable as he is, he cannot know everything about the Clause, although I very much admired his technique today—I should like him to give particular attention to it. However difficult it may be to deal with the first new Clause before Report, I think that the second one should be accepted.

Mr. Marsh: With the greatest respect to my hon. Friend the Member for Bermondsey (Mr. Mellish), I hope that the Financial Secretary will not assist these particular reactionaries. My hon. Friend will be well aware that we on this side recently discussed in great detail consequences which stemmed from personal attacks on colleagues. While the penalties are apparently limited, none the less one would hope that that would deter my hon. Friend from pursuing this issue.
I believe in the need for competition as a spur to efficiency in industry and commerce. It is perfectly reasonable and is a typical Labour Party policy. It is our intention after the next election to construct a number of public companies in order to increase the degree of competition in British industry, and in direct competition with existing companies. I also believe that the consumer has a degree of right to freedom of


choice concerning how he conducts his activities.
The point at issue is the very widespread practice of people who purchase alcoholic drinks through clubs and associations at below the normal retail price because they buy in bulk. There must be very few hon. Members who do not at Christmas time purchase their drinks at privileged prices. I speak only for myself, of course, but I should be pleased to hear the hon. Member for Shipley (Mr. Hirst) say that he has always paid the full market price for the liquor which he purchases.

Mr. Hirst: I am pleased to oblige the hon. Gentleman. I have already declared that I am a director of a brewery. So I do not have to go in for the illicit trading which this Clause seeks to try to prohibit.

Mr. Marsh: I appreciate that the hon. Gentleman is pursuing a degree of Orwellian equality in which all men are equal but some are more equal than the rest. Be that as it may, I think it is a harmless practice.
I can appreciate the problem of the retailer.

Mr. Brewis: It is not confined only to members of clubs, but the ordinary private individual can purchase liquor direct from the wholesaler.

Mr. Marsh: I want to come to that point, but I do not want to pursue this long as I am deliberately making a noncontroversial, non-party speech in the hope that hon. Members on both sides will be able to support it.
There are two arguments. One is about the interpretation of the law. With respect to my hon. Friend the Member for Bermondsey, I think his interpretation is open to question. The other one is on whether or not this is a fair method of trading. There is enormous economic waste in this country in retail distribution because retail distribution is so hopelessly inefficient. It seems an extraordinary argument from one of my hon. Friend's political persuasion to suggest that one has to go through a retail outlet if there is no apparent need so to do.
My final point is that anything which increases the number of outlets for the

sale of alcoholic liquor in this country, subject to the controls which are imposed in public houses and elsewhere, is to be welcomed. This country has more extraordinary liquor laws than any other country in Europe. I do not know whether it is possible to have a survey into this but I should have thought that the peculiar problems which an adult in a civilised country like Britain has in getting a drink at certain hours of the day must have a deleterious effect on the tourist trade.
I hope that the Economic Secretary will give the matter more consideration before he gives way to what appears to be, on the one hand, a peculiar reading of the existing law and, on the other hand, a degree of special pleading—

Mr. Mellish: I am sorry that my hon. Friends brings in an argument about special pleading. Thousands of retailers are involved in this, and the point is that conformity is incumbent on some people and not on others, though all are selling the same sort of stuff. What I am arguing is that all should be subject to the same law, and that the law should not apply to some sections and not to others. My hon. Friend and I are both motorists. He would not expect that I should be allowed to drive just as I like and not be punished if need be, while if he were to drive as he likes he would be punished.

Mr. Marsh: Having met my hon. Friend at the Elephant and Castle recently when we were in our respective cars, I am not sure he puts that into practice all the time.
One can appreciate the point of view, but there is a perfectly reasonable point of view against it—the point of view of the consumer which I should have thought deserving of equal consideration.

10.45 p.m.

Mr. Walker: I wish to support the remarks made by the hon. Member for Greenwich (Mr. Marsh) and add to them the problem connected with a sphere of retailing which is very much connected with my constituency, the mail order houses. There is an increasing sale of wines and spirits from mail order houses. It is becoming increasingly popular, because it is a way in which customers can choose items they wish to secure and obtain a degree of credit.


Those in lower income groups who want a celebration at Christmas time or in connection with a wedding can use the facilities of a mail order house and obtain wines on a basis which enables them to obtain a degree of credit which is made available. New Clause No. 73 would prevent any mail order house selling intoxicating liquor through its normal processes. This would be a curtailment to be deplored.

Mr. Hirst: We are only trying to ensure by the Finance Bill what the licensing Acts do not ensure, that sales are made from licensed premises and not from unlicensed premises.

Mr. Walker: New Clause No. 73 says:
If any person solicits, takes, canvasses or procures orders for intoxicating liquor either directly or indirectly at premises in respect of which a licence is not held".
All the agents of a mail order house take orders on premises which are not licensed. If this Clause were agreed to they would not be allowed to do so. It would have the effect of stopping the sale from mail order houses.

Mr. du Cann: I am sure that the Committee is grateful to the hon. Member for Bermondsey (Mr. Mellish) for raising a subject about which there is undoubtedly a great deal of feeling both in the Committee and outside. I am sure he would wish me to say, and the Committee would agree, that those for whom he has spoken are most worthy and admirable people. There is no question about that.
My hon. Friend the Member for Shipley (Mr. Hirst) asked if we had been giving thought to this matter. He and the Committee may like to know that I received a deputation a little time ago from the National Consultative Council of the Retail Liquor Trade, led by Councillor Webb, which first gave me an interest in this subject. So it has been considered. I should like to follow what the hon. Member for Bermondsey said and to describe the situation in general. Put in a nutshell, the position is that some licensed wholesalers, and also some licensed retailers, have been expanding their businesses by offering wines and spirits at cut prices through certain channels. The hon. Member for Bermondsey and the hon. Member for

Greenwich (Mr. Marsh) gave examples of wine societies, institutions, office associations, sports clubs, and now we learn, even the sanctum sanctorum of the trade unions. Retail organisations are opposed to this, although some of their own members are offending in the matter. They sought to establish that this kind of activity was prohibited by, and illegal under, Section 239 of the Customs and Excise Act, 1952. Legal opinion has not upheld that view.
Trade associations have been very reluctant to accept this conclusion, hence no doubt, the present debate. They have made substantial representations to the Customs about it and have been told that there is no Revenue ground on which any change in the law could be justified. It is clear that the excise control of liquor is in no way affected by the situation which is developing. I want to make that point clear. I shall come to social considerations later. They, perhaps, are another matter. The hon. Member for Bermondsey raised in particular the question of sales to young persons. These are of course subject, irrespective of who is selling anything or handing it on, to the ordinary restrictions imposed by the ordinary law. I wish to give a clear warning on this point. It is that sales to persons under the age of 18 by a collector would certainly make the licensed trader from whom that collector accepted his supplies liable for a breach of the law. I think that that is a substantial safeguard against the kind of social danger to which the hon. Member for Bermondsey has properly drawn attention.

Mr. Brewis: Suppose that one gets through the post a catalogue of such-and-such intoxicating liquors and one sends off a cheque and the liquor comes straight from the distillery, who will check the age of the person supplied?

Mr. du Cann: There are always the practical problems, but that does not affect the legal position. Young people may fill football coupons, or young people may masquerade as older people and go into public houses, but the law is firm and it is the Government's intention to see that it is applied.

Mr. Mitchison: I am speaking off the cuff but I think that circulars from moneylenders usually contain the qualification that no money is to be loaned


to persons under the age of 21. I wonder whether mail order houses selling liquor in this way are obliged to put qualifications on any circulars they issue or to make the qualification in any public canvassing they do.

Mr. du Cann: I cannot honestly say that I have ever received a circular from money lenders, but I dare say that what the hon. and learned Member for Kettering (Mr. Mitchison) says is entirely correct. The hon. and learned Member drew attention to the fact that there is a class of trader who probably for his own protection stipulates that he will not do business, as far as he is able to prevent it, with persons who are minors. That is obviously a matter of common sense and protection. I am not qualified to say what is the practice of mail order houses but their legal responsibility is entirely clear and any prudent organisation would be well advised to take precautions. Whether they will do so after reading this debate at this late hour of the night I should not like to say, but the law on sales to young persons is entirely clear.
The proposed new Clauses seek to assist the desire of the trade to control the position by a double move. The first part would be to take away the price advantage by preventing a wholesale dealer giving wholesale terms to members of an association or club, and so on, except for purchases of not less than wholesale quantities. This would rule out the system currently adopted. My hon. Friend the Member for Shipley, blushing with his success in getting his new Clause accepted by the Government, will find himself right again in saying that this is not a practical proposal. One cannot inquire into people's minds. I could not advise the Committee to accept that new Clause for that reason.

Mr. Mellish: Would not the hon. Gentleman agree that the present system of issuing wholesale licences is very undesirable in that there is no need of any proof of the suitability of the wholesaler and no inquiries are made in the district? Hardly any question is asked. and almost anybody can obtain a licence to sell a commodity which is subject to very tight laws when anybody else sells it on retail premises.

Mr. du Cann: That is a parallel to some extent with tobacco licences, but the law is designed to protect the revenue and we are entirely satisfied that it is being protected.
The second new Clause is an attempt at a wider solution by rendering these transactions illegal by tightening the wording of Section 239. The difficulty with this new Clause is not only a matter of drafting. According to the best advice available to me, the Clause does not make any difference to the interpretation of Section 239. It is the hon. Member's argument that Section 239 is in any case defective. I must say that the new Clause is equally or even more defective because it will not achieve the purpose which the hon. Member has in mind. Therefore, I must advise the Committee again not to adopt this new Clause.
We have this situation. The hon. Member for Greenwich and my hon. Friend the Member for Worcester (Mr. Walker) are in favour of no action at all being taken in this matter. The hon. Member for Bermondsey and my hon. Friend the Member for Shipley are in favour of some action being taken. The matter really comes in sum to this: there are no Revenue grounds for altering the law. There may or may not be social grounds. This is a matter for discussion, and perhaps for argument. We are not discussing the widest social aspects of the matter; that is to say, whether or not liquor should be sold at all. We are not engaging, so to speak, in a temperance debate. What we are discussing is the simple and narrow question, as the hon. Member for Greenwich suggested, of the methods of distribution that should be adopted.
I must make it clear that, so far as the Treasury interest is concerned, the Government are obviously loth to interfere with existing practices, let alone to stop the development of new practices; whereas the hon. Member for Greenwich suggested that these are possibly in the interests of and favourable to consumers in general. It must be appropriate that traders should develop their businesses as they see fit. There can be no social objection to that. In a sense, one can draw a parallel with trade in more ordinary goods, in the sense that if people band together


to buy refrigerators cheaply, jolly good luck to them. I do not say that retailers in general do not render splendid service. If people like to go and buy things from traders who do not give them service, that is a matter for them—

Mr. Mellish: That is an unfair argument, to talk about a retailer selling refrigerators. This is also the fallacy in the argument of my hon. Friend the Member for Greenwich (Mr. Marsh). We are discussing the retailer who is licensed. He has to go before the magistrates and conform to certain conditions according to the law. If he were just an ordinary retailer with none of these restrictions, I would not be arguing this case. Of course, may the best man win and may the cheapest price prevail, but this argument is so unfair. We cannot, on the one hand, impose conditions on a retailer and, on the one hand, kick him around.

Mr. du Cann: There are many classes of retailers who have to conform to various 'legal requirements, in connection with the welfare of their staff and all the rest of it.

Mr. Mellish: Are they subject to the licensing laws?

Mr. du Cann: Broadly speaking, this is simply a matter of trade discipline. If the trade objects to these, so to speak, private enterprise efforts, it is really up to the trade, basically speaking, to regulate itself.

Mr. Hirst: With respect to my hon. Friend, he has misunderstood this Clause. I am sorry, because he has been doing magnificently. He has churned through thousands of technical matters today, but honestly he does not know what he is talking about. I do not want to be rude, but he really does not. Certain hon. Members do know what they are talking about. Does my hon. Friend suggest that we can all set up shops and have no licensing at all? If so, why on earth have we spent so long dealing with a licensing Measure recently? This is not a case of the ordinary trader. It is a case where the laws says "You have got to be licensed to sell liquor." We object to people selling it in a business which is not licensed.

Mr. du Cann: I am sorry that I should disappoint my hon. Friend, for I thought that I was giving a sober explanation, even though it is a little late in the day. I remind him that I did describe the position under Section 239 of the Act. I have advised the Committee—as the hon. Member for Bermondsey has agreed—that there is no law being broken here. I have added to that that there is no Revenue problem. It is a social problem, and, broadly, it is a matter of trade discipline. It is a battle of interests, to put it like that.

11.0 p.m.

Mr. Victor Goodhew: I am sorry to butt in, but it is not just a social problem. It is a licensing problem. My hon. Friend must not try to assure the Committee that this is merely a social problem when it is, in fact, a question of some traders being licensed to deal in certain goods while others are not. We either abandon the whole principle of licensing or we must maintain the law as it stands for licensed premises.

Mr. du Cann: I am surprised at the strength of opinion that there should be a monopoly of distribution in one sector. But I will not pursue that further because it must be the wish of the Committee that we come to a conclusion on the matter.
I repeat that there is no Revenue interest in this. There is no Revenue protection difficulty. It seems to us that it is a social question and a matter of trade competition. On the other hand, it must be right to consider the views of the Committee on a serious matter of this kind very carefully. It seemed to us, therefore, that the appropriate course would be to see that my right hon. Friend the Home Secretary, who is concerned, has his attention drawn particularly to the matters which have been discussed and described during the debate. That I certainly undertake to do.
In the light of that assurance, I very much hope that the hon. Gentleman, whose warm feeling on the matter I quite appreciate, will not seek to press the new Clause.

Mr. Mitchison: I agree with a good deal of what the Economic Secretary said, but we must have the position a little clearer. The new Clause is in order on the Finance Bill. It relates to the practice of the Customs and Excise, and, though there may be no fiscal question directly involved, it still entails a real Treasury responsibility. On the other hand, as one hon. Member rightly said, the real question here is a licensing question. We are not here to conduct a temperance debate or a debate on whether or not there should be any licensing laws. This is a much narrower point. As it seems to me—I make no claim to special knowledge, and I have merely listened to the debate—here are provisions in the Customs and Excise Act which, presumably, have been introduced for some purpose, and there seems to be a genuine difference of opinion as to what they really mean.
Two fundamental points emerge. First, it is perfectly easy to get a wholesale licence. It is, as the hon. Gentleman himself said, rather like the tobacconist's licence which is now to go. The standard is much the same. On the other hand, a retailer's licence is a far more serious matter. It is really one of the engines of control over the sale of intoxicating liquor. We are not discussing the policy of it, but, assuming, as we must, that there is some reason for controlling the sale of intoxicating liquor, at least the people concerned ought to know what the law is. We must be quite clear that the broad purpose behind our licensing legislation is being achieved. Having listened to the debate, I am far from satisfied that it is being achieved.
I do not want to take up the time of the Committee. I do not feel inclined to do so, and perhaps other hon. Members feel the same. Obviously, this cuts across the Floor of the Committee. But we should have an undertaking that the hon. Gentleman will see the Home Secretary and ask him to consider this. Then, if my hon. Friend the Member for Bermondsey (Mr. Mellish) does what I think he would be wise to do—withdraw this Clause—we may have an opportunity on Report to take up this matter again if an appropriate Amendment is fortunate enough to be selected.
The Treasury should, by then, be ready to state its considered views.

We have heard the views of the hon. Gentleman, but, with respect to him, I did not feel that the Government had really got the point that was being raised. Some of the remarks about monopoly and the character of retailing were rather wide of the mark. It is simply a question of what is the intention of the licensing laws in this matter, whether that intention is being carried out, and whether there is some provision on the Statute Book the meaning of which nobody knows and nobody can enforce. I hope that the hon. Gentleman will do as I suggest, if this Clause is withdrawn, and will take steps to see that the Government appreciate the issues involved if and when my hon. Friend and other hon. Members see fit to raise this matter at a later stage.

Mr. du Cann: If the Committee so wishes, I will certainly repeat that it is my intention to see that the matter is discussed with my right hon. Friend the Home Secretary and to consider what he says. Naturally, we shall take into account the feelings expressed tonight.

Mr. Mellish: I am not happy with the reply of the Economic Secretary, because he did not seem to take the point. This is a matter concerning the licensing system and the injustice of it to those in the retail trade. I understand that the appropriate organisations have been telling the Government—and I presume that means the Home Office—for a long time but that no action has been taken. It is because of that that we have put on this short but, I hope, useful debate.
I will, on the advice of my hon. and learned Friend the Member for Kettering (Mr. Mitchison), withdraw the Clause. We shall try again on Report in the hope that you, Sir Robert, will select such an Amendment to give the Government a chance to tell us of their discussions with the various Departments concerned.

The Deputy-Chairman (Sir Robert Grimston): I cannot say anything about the selection of Amendments on Report stage. That is entirely a matter for Mr. Speaker.

Mr. Hirst: I anticipated this situation. I was going to ask my right hon. Friend the Chancellor to consider this matter between now and Report. The point has been misunderstood tonight. We are not going to get the answer by discussing it


with the Home Secretary. This is an Excise matter.
The hon. and learned Member for Kettering (Mr. Mitchison) put the thing very well. I am grateful. He was about 99 per cent right, which is more than most people have been about it. According to experience, it is not very easy for a back bencher to get an Amendment accepted on Report which has been considerably discussed in Committee, so I hope that my right hon. Friend will at least endeavour to look at this and perhaps be able to do something on Report.

Mr. Mellish: I am grateful for the co-operation I have had from a very unexpected source. In the light of the statement by the Economic Secretary, and in the knowledge that the Chancellor has listened to the debate—I know his intelligence in matters of this kind, so I am sure that he will discuss it and put something down on Report—I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(PROFITS TAX: REPEAL OF LIMITATION ON DEDUCTIONS ALLOWABLE FOR DIRECTORS' REMUNERATION.)

Paragraph 11 of Schedule 4 to the Finance Act 1937, as set out in section 34 of the Finance Act 1952 and as amended by section 33 of the Finance Act 1959 (limits on deductions for purposes of profits tax in respect of the remuneration of full-time working directors of director-controlled companies), is hereby repealed— [Sir H. d'AvigdorGoldsmid.]

Brought up, and read the First time.

Sir Henry d'Avigdor-Goldsmid: I beg to move, That the Clause be read a Second time.
Only too conscious of the fact that I have taken only a minimal part in these proceedings, I should like, first, to express my appreciation of the fact that at this late hour those who have borne the heat and burden of the day are still present, and that includes the Front Benches on both sides of the Committee.
This little new Clause deals with the peculiar position of director-controlled companies in respect of the remuneration of their full-time working directors. This is a matter with a history, which goes back to 1937 when the National Defence Contribution Tax was intro-

duced and when it was obviously appropriate for some limit to be fixed to the remuneration of full-time working directors of director-controlled companies which escaped the new levy, which, in due course, became the Profits Tax. The figures were fixed in 1937, and they were reconsidered in 1959.
I should like, first, to ask my right hon. Friend whether there is any justification for treating director-controlled companies on a basis different from that of private partnerships. Private partnerships in business are not subject to Profits Tax. The taxation is paid by the individual partners on the basis of Income Tax and Surtax. It is also worth mentioning that what are called Surtax companies are dealt with in Section 245 of the Income Tax Act, 1952, and in that case the remuneration of directors is not caught by this provision. In other words, the Profits Tax is not applicable in those cases. My first point is that it might be time to reconsider the position of director-controlled companies and to see whether they should not be aligned with private partnerships with which they have so much in common.
The second point comes clearly out of the discussions of this subject in 1959. In the Finance Act, 1959, the limits fixed for the remuneration of full-time directors which escaped Profits Tax was raised. This was a Government proposal and, on the Opposition side, the hon. Member for Sowerby (Mr. Houghton) moved, not a countering Amendment, but an Amendment to fix a slightly lower limit. In other words, there was agreement on both sides of the Committee that the limits fixed in 1937 were no longer appropriate in 1959.
The debate on that occasion was answered by my right hon. Friend the President of the Board of Trade, who was then Economic Secretary to the Treasury. He referred to the fact that there were some 35,000 director-controlled companies—and that may be substantially the case today—and he added that the Clause was a move in the direction of equity. The Clause was accepted without a Division.
What is the remuneration of full-time working directors which escapes Profits Tax? I think that the Committee will be surprised when it is reminded how low it At present, if there are two full-time working directors, a total of


£5,000 can be allowed in respect of both of them—not either but both; if there are three the figure is £7,000; if there are four the figure is £9,000. In the case of any individual director the highest earnings that escape being assessed for Profits Tax are as small as £3,000.
11.15 p.m.
I wonder whether in terms of present conditions these are realistic figures. We are now getting used to very high salaries for executive directors. These salaries are, naturally, caught for Income Tax and Surtax, and one wonders whether the director-controlled company, which is certainly looked upon with some wariness by the Revenue, ought not to be treated a little more generously in this respect. It seems to me that in this sort of matter a director-controlled company is at a disadvantage in competition with both a private partnership, which escapes Profits Tax altogether, and a larger company which is not director-controlled.
These are matters which at this hour even at this stage of the Bill warrant genuine consideration by my right hon. and hon. Friends. I should be interested to hear whether they do not consider that the figures which in 1959 were considered barely adequate ought not now to be revised upwards so that the Profits Tax exemption in respect of individual full-time working directors should correspond very much more closely with the remuneration of a full-time executive director, which might be as much as £5,000.

Mr. Diamond: Does the Clause seek to raise the limit slightly—the hon. Gentleman spoke of "a little more generous treatment"—or to remove the ceiling completely?

Sir H. d'Avigdor-Goldsmid: The hon. Gentleman will realise that it would be quite pointless for me as a back bencher to expect to find a formula which would be acceptable to the Government. It was much more satisfactory to raise the whole question as a subject for discussion, which enables me in due course, if I receive permission from the Committee, to withdraw the Clause without prejudicing any particular figure for consideration by my right hon. Friend on a future occasion.

Mr. Barber: As appears on the face of this new Clause, its purpose is to repeal

paragraph 11 of Schedule 4 to the Finance Act, 1937, which is the provision which, as it has been amended on a number of occasions, imposes limits on the amounts of directors' remuneration which can be deducted in computing the profits of director-controlled companies for Profits Tax purposes.
I should like to explain the purpose of the paragraph which my hon. Friend seeks to repeal. Ever since the introduction of the Profits Tax in 1937 there has been some restriction on the deduction allowable for remuneration of directors of director-controlled companies. This was considered necessary because, otherwise, the directors could take the whole or, at any rate, a pretty large part of the profits in the form of remuneration and so free the company from liability to Profits Tax on sums which were really a return on capital invested in the business and, therefore, ought to bear the tax. Of course, the restriction applies only where the directors have a controlling interest in the company. Furthermore, it does not apply at all to the remuneration of what are called whole-time service directors; that is, broadly, directors who work full-time for the company but do not own or control more than 5 per cent. of the ordinary share capital of the company. The present limit is laid down in paragraph 11 referred to in the new Clause. I need not refer to the existing limits which rule at the moment, because they are familiar to my hon. Friend and, I am sure, to many other Members.
There are really two questions for consideration. The first, raised by my hon. Friend, and also the one with which the new Clause deals in terms, is whether the restriction in question should exist at all, or whether it should be scrapped altogether. As I have said, it was originally introduced to prevent the danger that a large slice of the profits might be distributed in the form of remuneration and so avoid liability to Profits Tax. I must tell the Committee that the reason for having some restriction still seems to me to be a valid one.
As I expect my hon. Friends will know, the Royal Commission considered this point. I shall not weary the Committee with the whole passage, but I think that I ought to quote part of it


to assist the Committee to reach a proper conclusion. The Royal Commission said:
… if, as we recommend elsewhere, the structure of the tax"—
that is the Profits Tax—
is substantially simplified and the provisions far exemption and abatement are not retained, the main justification for the existence of Section 32 of the Finance Act, 1951, will disappear with them. But the complications that arise out of the special status of director-controlled corporations will remain. The special status given to such corporations is itself, as we have said, a form of anti-avoidance legislation, and we conclude, though with reluctance, that we cannot treat it as unnecessary and recommend its abolition. The rules that determine the deductible amount of the remuneration of such directors are, of course, arbitrary and it is hardly to he expected that they should appear to have any particular validity. The first Tucker Committee recommended certain alterations of detail which are no doubt an improvement. But they came to the same conclusion as we do that some such rules were 'a necessary safeguard for the Inland Revenue '. Our conclusion is that the provisions that bear upon director-controlled corporations ought to be retained …
No new circumstances have arisen since that recommendation to lead one to suppose that no restriction at all is required.
There remains the question to which my hon. Friend also referred, as did the hon. Member for Gloucester (Mr. Diamond), and that is whether the present limits are right. I should remind the Committee that they have been relaxed on a number of occasions—in 1947, in 1951, again in 1952, and on the last occasion in 1959. I can promise my hon. Friend, and, indeed, I hope that what I say will be welcomed by those in the Committee who are not prejudiced about these matters, that this is just the sort of restriction which one must watch closely from year to year and, if further relaxation is justified, then obviously my right hon. Friend will not hesitate to amend the law.
Therefore, although I feel that I cannot advise the Committee to accept the new Clause which, as has been pointed out, would repeal what is in the main a necessary anti-avoidance provision, and which, incidentally, would cost £7 million a year, I hope that what I have said about keeping the limits under review will encourage my hon. Friend to seek the leave of the Committee to with-

draw gracefully and so enable us to end our discussions on the new Clause in absolute harmony.

Mr. Callaghan: I think that I ought to disturb the harmony a little, because I am not in agreement with everything that has been said. I am in agreement with some of the things that have been said, but there is an important factor missing in this short debate, and that is the speech which the Chancellor of the Exchequer made to the Master Cutlers' feast in Sheffield last week.
I read that speech with great care and attention. Indeed, I quoted it to the newspapers today when they asked for my views about a particular matter, and that was in relation to increases in wages, incomes, profits and dividends. I think that everyone here knows how the Government have been joining, and the Chancellor of the Exchequer leading, the band—no increase in remuneration greater than 3 to 3½ per cent. per annum. This is the utmost that can be tolerated, he said, if we are to have a rate of growth of 4 per cent. per annum. I am a little astonished by the debate, which admittedly is not concerned directly with raising remuneration, but by an extension of the same principle it clearly arrives at the same end and conclusion, namely, the amount which is to be deducted from a particular sum in determining the point at which taxation starts.
I have the greatest respect and liking for the hon. Baronet the Member for Walsall, South (Sir H. d'AvigdorGoldsmid), but his thinking on these matters is entirely different from his thinking on an incomes policy. I doubt if the thought has ever crossed his mind that any increase might be related to the 31- per cent. principle which he is enjoining upon every trade unionist. The hon. Baronet is most anxious to explain the point to me, so I will gladly give way to him.

Sir H. d'Avigdor-Goldsmid: The hon. Gentleman is very kind, but he has not grasped the point. Any remuneration in the hand of a director is liable to Income Tax and Surtax. Surely we agree that we need a growth in profits, and the remuneration of directors is usually based on an increase in profits. It is the company itself that pays the Profits Tax. It is not the individual director.


With great respect to the hon. Gentleman, nobody need feel that they are put off working harder for a company because the company is earning more.

Mr. Callaghan: If the hon. Baronet had not been quite so eager to interrupt, he would have heard me say that it was an extension of the original point about the 3½ per cent. It is not the main point. Everybody who has studied the wording of the Clause realises that. I ask hon. Members to realise that these issues are related. This Clause is tabled to repeal this provision, which has been in existence since 1937 and which has been extended twice since, certainly as recently as 1959. If hon. Members opposite want their policy on incomes to succeed, they must have regard to what they are doing in other directions. I believe that some hon. Members opposite manage to divide their minds into two completely different compartments on these issues.
I myself am absolutely convinced about the need for an incomes policy. It is the alternative to devaluation. I believe we have to succeed in getting it. If we are to have an incomes policy, there must be the same mental approach to the problems of directors as there is to the problems of tool fitters. Unless we get a national approach, in my view we shall not begin to succeed in an incomes policy. I do not think that the Financial Secretary committed himself at all. In fact, he uttered soothing noises to his hon. Friend. I was a little sorry that he indicated that the Treasury might even consider raising the limit at this stage. I cannot believe that it would be of the slightest advantage or of the slightest national gain to do so. The Financial Secretary gave no real encouragement. He said he would consider it. I want to drive a very hard nail into the coffin and say that I hope that when he has considered it he will reach the very firm conclusion that nothing should be done about it.

Sir H. d'Avigdor-Goldsmid: I have been invited to withdraw gracefully. I appreciate the adverb. I am sorry to hear the hon. Member for Cardiff, South-East (Mr. Callaghan) take this line. It is not the line that his colleague the hon. Member for Sowerby (Mr.

Houghton) took when this matter was discussed in 1959.

Mr. Callaghan: There was not an incomes policy then.

Sir H. d'Avigdor-Goldsmid: All I am saying is that I am sorry that the hon. Gentleman is taking a line definitely retrograde from the one taken by the hon. Member for Sowerby when this matter was discussed in 1959. With the permission of the House, I ask leave to withdraw.

Motion and Clause, by leave, withdrawn.

Schedules 10 to 12 agreed to.

Bill reported, with Amendments; as amended, to be considered Tomorrow and to be printed. [Bill 119.]

Orders of the Day — NATIONAL MUSEUM OF WALES

11.30 p.m.

Motion made, and Question proposed, That this House do now adjourn, — [Mr. Finlay.]

Mr. W. G. Morgan: It is rather hard to belabour my hon. Friend the Economic Secretary with yet another financial problem after the long discussions which we have had on the Clauses of the Finance Bill, but he will appreciate that the matter which I shall raise is one in which the Principality of Wales has a very keen interest. It is not the first time that this problem has been brought before the House. Hon. Members will recall that this was the subject of an Adjournment debate just over two years ago, when the subject was raised by the hon. Member for Anglesey (Mr. C. Hughes) and the reply was given by my right hon. Friend the Home Secretary in his then capacity as Minister for Welsh Affairs.
The particular matter which I wish to raise, and which was raised then, is Treasury support, by which I mean capital grant, to that part of the National Museum of Wales which is known as the Welsh Folk Museum and is situated at St. Fagan's Castle, near Cardiff. May I, at the outset, make one point clear, and I do so to dispose of it and because it was gently touched upon in the previous Adjournment debate, to which I have referred, in April, 1961. I am not here concerned—and I think that the House need


not be concerned—with the question whether the National Museum in Cardiff and the Folk Museum at St. Fagan's should be separately administered.
I know that powerful arguments can be adduced either way, and I do not propose to go into them tonight. All I am asking the Government is that for this purpose, and, indeed, any other purpose, they should regard the Folk Museum, about which I shall make my observations, not as a mere appendage of the National Museum in Cardiff, because both institutions are constituent elements within the framework of the Welsh National Museum in just the same way as the British Museum at Bloomsbury and the Natural History Museum are constituent elements in the framework of the British Museum.
My hon. Friend already has some idea of what the Welsh Folk Museum is and how it came into being, but perhaps it would be of some assistance to the House if I recapitulated some of the salient facts about it. Its official life began when it was opened at St. Fagan's Castle on 1st July, 1948, but, in fact, it had its genesis as far back as 1932, when the so-called sub-Department of Folk Culture was set up in the National Museum in Cardiff in the charge of Dr. Iorwerth Peate, to whom Wales owes an immense debt of gratitude for his creation of the National Institution. That sub-Department was promoted into a full Department in 1936, and thereafter began the search for a suitable site. In the nature of things, events were held up by reason of the late war, but in 1946, due principally to the great generosity of the Earl of Plymouth, St. Fagan's Castle, near Cardiff, with 100 acres of garden and grounds, were acquired on nominal terms for the Folk Museum.
Suffice it to say that there has been enormous progress and development since 1948. To begin with, there was only a skeleton staff and very little in the way of exhibits except the castle itself and its grounds. Today, fifteen years later, there is a staff of nearly 80 and two main Departments There is the so-called Department of Material Culture and another dealing with oral traditions and dialectology. As far as the first is concerned, since 1949 a large number of traditional Welsh buildings have been removed to the folk museum and re-erected there. I

do not propose to run through the list, but they include such varying donations as an ancient farmhouse, an eighteenth century woollen factory and even a Unitarian chapel.
Pausing there for a moment, I should like to emphasise that every building without exception has been a gift from its owner and that the cost of removal and re-erection has been borne in every case by donations from various institutions such as Welsh local authorities and the Pilgrims' Trust. There has been no Treasury support at all for this work.
The principal object of the second Department, which deals with oral traditions and dialects, is to make a comprehensive survey of the whole field of spoken Welsh, particularly in those areas such as Monmouthshire where the ancient dialects have almost disappeared. It is a self-evident truth that this work, by its very nature, is very urgent. Here, again, such funds as have been obtained for this work, and which are by no means sufficient for the purpose, have come from two sources, the Gulbenkian Foundation and contributions from a radio appeal. There has been no Treasury support.
I come now to the crux of my appeal to the Treasury tonight, and that is the housing of the Welsh Folk Collection. This is generally regarded as one of the finest collections in Europe. It is also necessary that there should be adequate ancillary accommodation as well as accommodation for the exhibits themselves. This collection was started off at the National Museum at Cardiff, but was moved some time ago to St. Fagan's Castle, which everyone will agree is its natural home.
The crucial question of storage arose and, as an ad hoc measure to care for these items, it was decided to build a small section of the Folk Museum, which had been on the cards for some time. It was erected at the cost of about £15,000. This sum was provided entirely by Welsh local authorities. Again, there was no Treasury contribution. Suffice for me to say that the storage space provided by this erection of part of the necessary buildings is absolutely packed with specimens, and it is only possible to have a very small cross-section of them


on exhibition. As will be readily appreciated, work of this kind cannot stand still. The collection of items has to go on in view of the rapid disappearance of traditional materials of country life.
There are two main disadvantages resulting from this congestion. In the first place, there is no proper place in which to exhibit the object obtained, which is the raison d'être of any museum, and, even worse, insufficient storage space and consequent deterioration of the items there.
I have concentrated so far on the necessity for storage space, but of course, it is important to bear in mind that one needs administrative offices as well. One also badly needs a restaurant, because on good days about 2,000 to 3,000 people visit the museum, which is a very satisfactory state of affairs. This position was realised as far back as 1959 by the Standing Commission on Museums and Galleries, to whose advice the Government, very naturally, pay considerable attention. That body issued its fifth Report that year and I do not propose to refer to it in detail because its contents were brought very forcefully to the notice of the Government by the hon. Member for Anglesey in an Adjournment debate in 1961, and I have no doubt that my hon. Friend will have considered it as well.
It is sufficient for me to say that the position has steadily worsened since 1959, and there is now literally no storage space available. I want to be perfectly fair as to the position in 1961. The Standing Commission, to which I have referred, had in its Report given two priorities to Wales ahead of the Folk Museum. The first was to the west wing of the National Museum in Cardiff, the estimated cost being about £350,000. The second priority was to the National Library at Aberystwyth, the estimated cost of which was £200,000, and the Treasury guaranteed a grant of about 90 per cent. of the total involved, which would have amounted to £ ½ million.
It is only right that I should add, in fairness to the Government, that in the course of the Adjournment debate to which I have referred, a grant of about £3,000 was promised towards the construction of a car park at the Folk Museum, which was made necessary by

the large number of visitors. I do not think that in those circumstances one could reasonably have expected the Government to do more than they did in 1961, and I certainly do not seek to criticise them for the action they then took in view of the priorities laid down by the Commission. The short point is that that was two years ago. Things have got appreciably worse since then, and it is important that this matter should be reviewed and urgently reviewed.
I pray in aid two things in particular. First, there has been a sixth Report of the Commission on Museums and Galleries in 1962, as a result of which the Folk Museum has been given top priority in Wales. Secondly, I refer to what was said by my right hon. Friend the Home Secretary in the debate in 1961:
I am not questioning the need. I have seen the congestion, there. I realise that these are not conditions in which objects of great historic interest should be stared…There is no question of this application having been rejected."—[OFFICIAL REPORT, 13th April, 1961; Vol. 638, c. 652.]
I think that these are the main points which I wish to urge, but I would bring to the notice of my hon. Friend two further matters. One is that the Welsh Folk Museum is the only national folk museum of its kind in the whole of the British Commonwealth. It has been visited by people from overseas. Indeed, I think that I can fairly say that it has proved an inspiration for folk museums elsewhere. Northern Ireland has shown a shining example in passing an Act in its own Parliament for an Ulster Folk Museum, to be financed jointly by the State and the local authorities. Ironically enough, the trustees of that Folk Museum, which only acquired its site in March, 1961, have paid frequent visits to St. Fagan's for guidance and advice. I understand that the newly appointed director is constantly in touch with the Welsh Folk Museum.
I come to my last point, the hardest point of all, I suppose—the question of cost. What the Museum authorities would like to have would be a further grant of about £100,000 per annum for three years. That would cover the cost of the store rooms, galleries, administrative offices and the rest. I stress that it is the store rooms and galleries which are the most important. The council


of the Museum has issued an appeal to the public for 10 per cent. of the funds needed, in the hope and expectation that the Treasury may be persuaded to provide 10 per cent. I hope that it is not being over-optimistic in this respect. So far the public have responded very well, but that no move has come from the Treasury and I hope that that silence will be broken tonight by my hon. Friend and that a promise will be made of assistance to this institution, which, I can fairly say, is one of the proudest creations of the Welsh nation.

11.42 p.m.

Mr. James Callaghan: Having received my season ticket for St. Fagan's Museum this morning, I am very glad to stay behind tonight for this debate and to congratulate the hon. Member for Denbigh (Mr. Morgan) on raising this matter and on the way in which he has put his case. I warn the Economic Secretary, before he replies, that 75 per cent. of the Members in the House at the moment are Governors of the Museum of Wales and that. therefore, we are in the majority and he had better be very careful about what he has to say.
There is a case here. The Museum is, in fact, suffering from its own popularity. I have seen the growth in the number of people attending over the years, and there is no doubt that it is impossible for it to show the exhibits which it has at present. Although I do not know the financial details as well as the hon. Member for Denbigh, I am sure that there is a very strong case here for making further provision to enable the exhibits to be displayed. It is no use having them all higgledy-piggledy as they are at the moment; they ought to be set out on show so that they can be properly seen.
I was very interested in what the hon. Member had to say about the need for a language laboratory. I think that the Welsh language took a terrible blow from the recent failure of Television Wales West and North. Whatever may have been the failings of that organisation, nobody ought to laugh and say, "We told you so", because I think it is a terrible thing when a language appears not to be able to command the attention which it ought to command. It is of vital importance--I say this as someone who does

not speak Welsh—that language should be preserved for the future.
I hope that it will, indeed, be more than preserved. I hope that it will remain as a lively and vigorous and poetic and fluent method of expression. There should be the creation of a language laboratory to survey and record not only the language itself, but also the different dialects of Wales, the differences which exist at present, audible even to my untutored ear. That, I understand from the hon. Member, would cost only £6,000. I hope that a start at least can be made on that project in order to house the staff necessary for the purpose, but I also urge the Economic Secretary, despite the stringency, to tell us that he can give some help to the Folk Museum as well.
Like the hon. Member for Denbigh, I do not wish to go into the question of politics, if any, but there is a need here which should be met for the people of Wales. I will conclude, because the Economic Secretary accused me, in an earlier debate tonight, of moralising, by moralising again and saying that people who have no pride in ancestry will have little care for posterity.

11.46 p.m.

The Economic Secretary to the Treasury (Mr. Edward du Cann): As the hon. Member for Cardiff, South-East (Mr. Callaghan) said, we ought to be grateful to my hon. Friend the Member for Denbigh (Mr. Morgan) for raising this very important subject tonight. I know him to be a Welsh speaker and it was obvious from his remarks that he is a Welsh patriot as well. I will do my best to answer the questions I have been asked. It is a little unusual to find myself outnumbered by Welshmen in this Chamber.
The House will forgive me if in the short time available I have to speak rapidly. The National Museum of Wales was created as a result of the initiative and generosity of the people of Wales and it is the youngest of the big national museums in these islands.
We have been speaking mainly about money and I want to talk principally in that context. The first grant was £2,000. In 1963–64, the grant in aid is £443,000, of which £196,000 is for maintenance expenditure and £247,500 for capital expenditure. These are large sums. Ten years ago, in 1953–54, the comparable


figure for maintenance expenditure, there being no capital expenditure, was £60,250, so it has multiplied by three since then.
At that time the total staff was 97 and today it is 155. an increase of 60 per cent. This is fine progress. Indeed, none of the other museums has developed more rapidly. The museum has made very great strides indeed and we all rejoice for that. One of the most important developments was the decision to establish a new Department of Industry, which received Treasury approval in 1957–58, and a history of industry exhibition was opened in 1960.
At St. Fagan's, to which my hon. Friend and the hon. Member for Cardiff, South-East referred, a survey of oral traditions has been launched. Great progress has been made in this urgent work of recording many of the old dialects of Wales before some of them, alas, die out with the last generation of Welsh speakers in their localities.
I thought that my hon. Friend was a little unfair to the Treasury when he said that though there had been a grant of £1,500 from the Gulbenkian Foundation and contributions as a result of a radio appeal, the Treasury had contributed nothing. That is not so. The Treasury has provided staff whose salaries amount to £7,500 a year, and the Treasury has also met the cost of adapting one of the buildings, formerly the director's house, and also provided a new Land-rover at a net cost of £700. I do not argue that more cannot be done, but the Treasury has made a contribution. These developments, among others, explain the increase in the grant-in-aid without which the developments would not have been possible. Treasury help now represents, and has done for some time, 90 per cent. of income for the Museum from all sources.
I should like to say a few words on the new west wing. The greatest development of all in this period has no doubt been the work done on the building of the west wing of the National Museum. In 1961, the then Minister for Welsh Affairs announced that the Government had decided to make an Exchequer contribution of 90 per cent. of the approved cost of the

two Welsh building projects recommended by the Standing Commission on Museums and Galleries as deserving priority, to which my hon. Friend has rightly referred. One of these was the west wing of the National Museum in Cardiff, which was then estimated to cost £350,000, a figure now revised to around £400,000. One of the perennial problems is the way in which original estimates do not seem to be fulfilled. I do not blame anybody, but it illustrates one of the difficulties. The other development was the completion of the first bookstack of the National Library of Wales at Aberystwyth, estimated to cost £200,000.
The first sod was cut on the site of the new west wing in June, 1962, exactly fifty years—a rather romantic thought—after the foundation stone of the Museum was laid by King George V. The work is now progressing rapidly and it is hoped that it will be completed in 1964. Provision for the Exchequer contribution has been made in the grant for the last three years: £10,000 in 1961–62, £71,000 in 1962–63 and no less than £247,500 in the current year, making a total of £328,500 to date with the balance to come next year.
The remaining 10 per cent. of the cost is being raised by a public appeal which the Museum has launched for £150,000, a target designed to provide a contribution not only for the west wing but also for future building projects in Cardiff and at the Welsh Folk Museum, to which I now turn.
We certainly do not regard the Welsh Folk Museum as a mere appendage of the Museum as a whole, but as an integral part of it. I was grateful to my hon. Friend for saying something about its history and its activities. It is certainly a unique and very remarkable place indeed. We know that the Museum Council is very anxious, as are many people in Wales, that an addition should be made to the building of the modern Museum Nock for the work of the Welsh Folk Museum.
Unfortunately, the Government simply cannot afford to do at once everything they want to do about the immediate projects of the 17 national museums, galleries and libraries throughout the United Kingdom. This is now the principal difficulty, which I am sure my hon.


Friend recognises. There has to be a system of priorities, and the Standing Commission on Museums and Galleries, to which the Government look for advice in these matters, did not originally—as my hon. Friend fairly pointed out—attach as much importance to the Welsh Folk Museum block as it did to the west wing in Cardiff.
However, again as my hon. Friend stated, in its sixth Report in June, 1961, the Standing Commission listed the Museum block of the Welsh Folk Museum among the needs deserving high priority, and the Museum Council, thus encouraged, renewed its application for a grant towards the cost of this work, now estimated at £346,000.
The scheme is very ambitious. It may be that the essential needs of the Welsh Folk Museum could be met by building on a more modest scale spread over a period of time. The possibilities of this are being investigated. It must be right to investigate these possibilities. It would not be practicable to bring building projects for the Welsh institutions within the museum schemes falling on the Vote of the Ministry of Public Building and Works, but we shall certainly need the advice of the Standing Commission on relative priorities.
This unique and splendid museum is sixteen years old. It is perfectly true that the Treasury has not yet provided a significant capital contribution. My hon. Friend is accurate and right to make that point, but the current grant has increased sixteen-fold from the estimated need when the Museum was founded in 1947. Therefore, we have not been inactive, idle, ungenerous or unrealistic. The assistance grant has increased from £4,000 in 1947 to £71,000 last year; and, moreover, it is a fact that it was originally suggested that the Treasury would not be called upon for a capital contribution. However, be that as it may, the Government believe that what is now needed is an agreed provisional building programme extending over a period of years and covering the essential needs of the National Museum of Wales, including the Folk Museum and the National Library.
There have been some preliminary discussions with the Welsh authorities along these lines, and the Standing Commission on Museums and Galleries will be con-

sulted. It is too early to say anything definite about priorities or timing or the level of Government assistance, but it is a fair assumption that some building for the Welsh Folk Museum will come high on the list, and we shall certainly make an announcement as soon as we can. We have this in mind. We must assess the position sensibly and realistically, and we shall do so. We shall make an announcement as quickly as we can thereafter.
I have one regret, which I think the hon. Member for Cardiff, South-East will particularly understand. It is this. Although I have visited a number of the museums and galleries for which the Treasury is responsible, I have not yet had the opportunity to visit the National Museum of Wales. That omission I intend to rectify at the earliest opportunity.

Mr. Callaghan: I extend an invitation forthwith. We will give the hon. Gentleman a jolly good time.

Mr. du Cann: I am grateful to the hon. Gentleman. If we can get rid of the Finance Bill I will come along. Incidentally, we are grateful to the hon. Gentleman for his help on that Bill. There are so many things in the Museum that I have read about and of which I have been told. I do not think that I need go into them in detail now; I only wish that I had the time to do so.
I am told there is some doubt on the subject of admission fees, and that there are some people who object to paying them. However much I am welcome, I shall pay my fee cheerfully, for it must be right to operate a system whereby the very great strain on the taxpayer is mitigated by the contribution of those who visit the museums. I shall look forward to coming, and I am grateful to the hon. Member for his invitation. I hope my hon. Friend the Member for Denbigh will be there to put the red carpet out for me and for my hon. Friend the Member for Swansea, West (Mr. Rees), who is sharing the Treasury Bench with me.
There is no question that the National Museum of Wales is a shining example of what can be achieved by partnership between the different interests concerned in the creation and development of a great national institution such as this.


The Welsh people, both the wealthy—of whom we have heard a certain amount during our recent debate—who have given splendid donations of money or objects for the collections, and the great numbers of patriotic citizens who are not wealthy, but have put their coins in the collecting boxes; industrial firms in Wales, who have responded generously to the public appeal and who have also given most of the exhibits for the department of industry; local authorities; and, of course, last but, naturally, not least, the Exchequer.
It is, perhaps, inevitable that over the years the Exchequer should have become by far the largest contributor. That does not mean that the contributions of the other partners are any less important and valuable than they used to be, either in themselves or as evidence of

the place which the National Museum occupies in the hearts of the people of Wales. It has been clear that it occupies a real place in their hearts.
I wish to say by way of reassurance to my hon. Friend that we think we can claim that Treasury assistance to the Museum has been on a worthy scale and that there has been and can be no justifiable complaint of parsimony or lack of sympathy on the part of the present Administration. Indeed, should there be any suspicion of that, let me do my best now by what I have said to dispel it, for, certainly, there is no lack of sympathy and nothing but admiration and equivalent pride.

Question put and agreed to.

Adjourned accordingly at two minutes to Twelve o'clock.